Salaries for IT contractors working in the City have jumped by 11% in the past six months - to the highest level for two years - as banks look to upgrade trading and risk platforms following last year's credit crunch.
According to research from the Association of Technology Staffing Companies (Atsco) hourly rates for IT contractors at banks have jumped from £45 an hour to £50 an hour is recent months, despite fears of a downturn in the sector following the credit crunch.
Atsco says the figures contradict forecasts by some analysts that the credit crisis would lead to an immediate, wider downturn in technology spending by banks.
Instead Ann Swain, chief executive, Atsco, says contractors look set to cash in on the credit crunch as banks put a freeze on permanent hires. Furthermore, demand for IT contractors in the banking sector may receive a further boost if the economic outlook remains uncertain.
"Banks may look to mitigate employment costs by putting a freeze on permanent hires, which often creates more opportunities for contract workers," she says.
Swain says the City is a long way from the post-9/11 downturn which saw IT jobs cut across all areas of financial services.
"Strong demand for IT skills in areas such as equities and commodities trading in investment banks is helping to pick up some of the slack on the credit side," says Swain. "IT departments are not as over-staffed as they were in 2001-02 in terms of IT skills, so there is far less fat to trim this time around."
Swain says the retail banking and insurance sectors are also continuing to spend on IT, leading to demand for contractors with the relevant skills. Retail banks are still investing in Internet banking and Web security, whilst spending on compliance with Solvency II and IFRS Phase II is leading to demand for IT skills in the insurance sector.
Stephen Grant, MD, Cititec, an IT recruitment outfit focusing on investment banks, says risk management and compliance are also still growing areas of demand for IT skills in the City, and this is set to increase following the credit crunch and rogue trading scandal at Société Générale.
Grant says banks are "revising their trading strategies" and this is leading to an increased demand for IT business analysts who can align IT systems with changing business needs.
"A lot of IT investment is now being channeled into beefing up trading systems on equities and commodities desks, where more efficient IT infrastructure is needed to process higher transaction volumes," says Grant.
A survey by recruitment consultant Claymore Partners last year found that, despite the global credit crunch, over half of US financial services firms are planning on increasing professional hiring in 2008, with IT and sales staff expected to be in greatest demand.