Banks lose favour with IT contractors

IT contractors in the UK are abandoning the financial services industry in droves in favour of more stable sectors, says a leading provider of contractor services.

The recent credit crunch that has hit banks and investment firms has led to a sharp drop in the proportion of IT contractors serving those companies, according to research from Giant Group.

It said its figures showed the lowest level of confidence in the financial services sector for four years, with contractors instead drawn to employers in boom sectors like engineering and construction, as well as the public sector.

Some 22 per cent of all UK IT contractors now work in financial services, compared to 25 per cent in the previous quarter of the year. And 23 per cent of IT contractors are optimistic about job opportunities in financial services next year, compared to 30 per cent at the end of 2006.

But Matthew Brown, managing director of Giant Group, said this dip in confidence may be temporary. "The advantage to City institutions of using IT contractors is that they are a very flexible resource, which can be highly responsive to market conditions, and it is for that very reason that numbers are likely to bounce back strongly as the market recovers," he said.

"The turmoil in the credit markets may actually lead to some good opportunities for IT contractors in the medium term, despite the short term correction," he added. "Banks and funds will be looking at IT solutions, such as improving their computer risk modelling and beefing up their back office IT systems to handle exceptionally high trade volumes."

He pointed out that many UK retail banks are still spending on web security and e-banking technology, while investment banks continue to require IT people in areas like risk management and compliance.

"The UK engineering sector is booming, and with the design stages of large projects such as Olympics 2012 and Crossrail only just underway, there is likely to be further demand for IT skills for the computer modelling and design testing components of these projects prior to construction, as well as during the network infrastructure phase," said Brown.

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