Credit squeeze hits tech contractors

The proportion of tech contract workers in the financial services sector is at its lowest level for more than three years.

Just 22 percent of IT contractors are working in the sector, according to contractor services company Giant Group, which blames the recent credit crunch in the financial services industry.

Expectations of jobs in the financial services sector have also dropped, with 23 percent of the 1,500 contractors surveyed saying they feel the majority of job opportunities in 2008 will be in the financial sector, compared to 30 percent saying this a year ago.

But Giant Group's managing director, Matthew Brown, expects the number of IT contractors in the sector to bounce back once the financial markets have recovered.

The turmoil in the credit market may actually provide opportunities for contractors in the medium term, as banks will look to IT to handle increasing trade volumes, according to Brown. He said IT skills will remain important for the financial sector, as retail banks will continue to need IT people to work on security and e-banking, while investment banks will need them to deal with risk management and compliance.

In addition, separate research from ReThink Recruitment suggests the demand for IT skills in general in the financial services sector could rise as banks change systems that failed to cope with the credit crunch.

Jon Butterfield, managing director of ReThink Recruitment, said some of the funds that suffered the heaviest losses need to refine and test their systems to be better positioned to respond to market volatility in the future.

But, for contractors looking outside of financial services, there is some good news: the public sector and engineering and construction industries have increased their share of IT contractors, with 14 percent working in the latter. And, with huge projects on the way — such as the London 2012 Olympic Games and the capital's Crossrail network — the demand for IT skills in these areas will continue to rise.