Financial services leapfrogs public sector to become biggest employer of IT contractors

The financial services sector has leapfrogged the public sector to regain its traditional position as the UKís biggest employer of IT contractors, reveals research by contractor specialist giant group plc. The public sector moves down to second place.

According to the latest giant Contractor Confidence Index (CCI), 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).

According to giant, a bounce back in sales of retail financial products, growth in investment banking and hedge funds, and the need to upgrade legacy systems is driving IT job creation in the City.

Matthew Brown, Managing Director, giant group plc, comments: The City shed a lot of IT staff when the stock market fell, many of whom were hoovered up by the public sector as part of the e-government drive.

Six months ago the public sector employed more IT contractors than financial services ñ for the first time in its history ñ but it now looks as if the natural order has been restored and the City is once again asserting its dominance.

He adds: City IT departments are now investing heavily in infrastructure. Projects that were put on hold during the downturn are being revived and financial institutions are hiring to meet demand from regulators.

For example, City banks are currently implementing new IT systems to comply with the Basel 2 risk management regulations.

However, giant warns that with the Cityís requirements for IT contractors growing, and unemployment among IT contractors very low, the public sector may find it increasingly difficult to recruit IT staff and secure the skills it needs.

Matthew Brown says: There arenít many out of work IT contractors for the City to pick up so itís becoming a question of who will it poach from.

It will be particularly tough for the public sector to compete with the City on pay and benefits, but if it doesnít it could face skills shortages. E-government projects tend to be heavily reliant on a number of key individuals who can be very hard to replace.

According to giant, one solution for the public sector would be to forge stronger links with specialist IT staffing companies, now that a candidate-led recruitment market appears to be returning.

The survey also polled contractors on a range of other issues concerning their current and future job prospects, including earnings growth, unemployment and what they look for in a contract.

The results show that confidence among IT contractors is at its highest level since the survey began nearly two years ago.

Earnings
70% of contractors say their earnings have increased this year compared to 45% who reported an increase last year. Only 6.7% of contractors say their pay has decreased compared to 28% who saw a decline in income in 2003.

Long term contractor unemployment evaporates
Contractors were asked about the average number of days between contracts. According to the research, the number of contractors not working for 60 days or more between contracts is now just 2.8%, down from 3.3% six months ago.

Explains Brown; Two years ago, as the downturn bottomed out, over a quarter of IT contractors were out of work. As demand has picked up the pool of reserve labour has dried up, to the point where unemployment among IT contractors is effectively zero.

This should start putting real pressure on contract rates to rise and we could see far more contractors switching jobs next year.

Job security becoming less important
Contractors were asked what attracts them most to a job by ranking each of the following criteria in order of importance.

Comments Matthew Brown: As the market strengthens job security becomes less of a concern for contractors as they no longer expect long periods without work when a contract ends.

Status issues like a reputable employer or a position of responsibility come to the fore in candidate-led markets as contractors can afford to be more discerning about who they work for and the projects they undertake.