IT contractors in the financial services sector are being paid 12% less than six months ago as the credit crunch forces firms to cut costs.
The report said this is the first fall in IT contract rates in the sector since 2002.
According to research from the Association of Technology Staffing Companies (ATSCo) and www.iprofile.org the average pay rate of £44 per hour rate is the lowest for five years. At the same time last year IT contractors in the financial services sector received £50 per hour.
This is the result of new employment contracts being signed with lower pay rates and not cuts to existing contractors' pay, said the report.
Ann Swain, CEO at ATSCo, said falling demand for IT contractors from banks is the cause.
"Contractors are typically first into and first out of any recession. The $64,000 question now is whether falling demand for IT skills in the financial services sector will ripple as far as permanent staff."
Phil Morris, European managing director at sourcing consultancy Equaterra, said banks are looking at areas to outsource and offshore to save money.
"There is strong price competition for anything that can be taken off-site and that is impacting contractors pay," added Morris.
But some parts of IT in financial services are likely to see an influx of spending as a direct result of the credit crunch.
"Market turbulence has exposed many latent problems that banks have with their back office clearing systems. These systems will need to be overhauled and updated," said Ann Swain.
ATSCo points out that the fall in pay for IT contractors in financial services is not being mirrored in the wider economy, with contract rates for all sectors static at £40 per hour.