Big IT spend from Banks could leave the public sector facing skills shortages in crunch year

E-government deadline 2005
FSA predicts massive IT spend by banks

The Government and the UK banking industry could be in direct competition for top IT staff, leading to skills shortages in key areas like project management, as both are set to investment hundreds of millions of pounds on IT projects this year says giant group plc, the contractor specialist.

UK banks are expected to spend hundreds or millions of pounds on developing IT systems that meet Basel II capital risk-management requirements in 2005. E-government - the governmentís requirement that all local and central government services should be available electronically by the end of 2005 - will cost the Government 1.5bn in 2005.

According to giant, IT spending by banks is likely to translate into a surge in demand for IT staff at a time when unemployment among IT contractors is just 2.8%. With banks unable to satisfy their IT staffing requirements from a pool of surplus labour, they may be forced to recruit from other sectors, possibly leaving the public sector facing skills shortages at a critical moment.

Matthew Brown, Managing Director, giant group plc, comments: The UK banking industry is ramping up for its biggest IT investment programme since the late 90s. The public sector will need all hands to the pump if its to meet its very specific e-government deadlines.

There are very few IT professionals out of work at the moment. Any organisation looking to recruit more staff is going to have to do some determined headhunting - something at which banks traditionally excel.

Research by giant showed that the financial services sector recently regained its status at the biggest employer of IT contractors, knocking the public sector off the top spot. According to giantís research, 21.2% of IT contractors (19.9% six months ago) now work in financial services compared to 20.5% in the public sector (20.5% six months ago).

Matthew Brown believes the public sector may be the most obvious place for banks to recruit IT staff from, particularly project managers.

He says: Pay has risen dramatically for public sector IT staff over the past year but remuneration rates are still well below what banks can offer.

According to giant, many senior IT staff migrated to the public sector after the dotcom crash. Persuading them to return to the City could be fairly straightforward as the business culture would not be entirely new to them.

Mathew Brown says: If banks do start offering big money itís hard to see the Government responding in kind. E-government projects tend to be heavily reliant on a number of key individuals who, if poached, could be very hard to replace.