The recent stock-market stumbles are already starting to have an effect on the IT market, with contractor rates slumping.
Research by online CV company iProfile.org and the Association of Technology Staffing Companies (ATSCo) has found that contractor rates for staff in the financial services sector have fallen to their lowest levels in five years.
The average hourly rate for a financial services contractor is now £44 per hour — a 12 percent drop on wages six months ago when a temp could expect £50 — and the first drop in rates since 2002.
The fall comes as employers cut the rates they offer new temporary staff.
ATSCo chief executive Ann Swain said contractors are typically first into and first out of any recession — but the big question now is whether falling demand for IT skills in the financial services sector will ripple as far as permanent staff.
"The key difference between this and the 2001/02 downturn is that IT departments had a skills surplus following the dot-com and Y2K booms, but there is much less fat to trim this time around. Some belt tightening is to be expected but mass layoffs seem unlikely at this stage," she said in a statement.
The news is not all bad for contractors, however. ATSCo and iProfile.org believe that wholesale layoffs among contractors are unlikely and that financial services companies will be pressed to route investment into areas of technology that can make their businesses more competitive — including new back-office clearing systems — or into contractors with skills particularly in demand during the credit crunch, including those with expertise in risk management and compliance systems.
The research also notes that City workers are being hit hardest, with IT contracting rates across the board stabilised at £40 an hour.