Demand for IT contractors plummets

by Editor 5/21/2008 2:56:00 PM

The latest industry index shows that the demand for financial IT contractors from the private sector was at a seven-year low last month.

The number of finance positions advertised for contractors was down 16.1 percent according to a recent Computer Weekly survey, which is the biggest drop since 2001.

IT contractors in financial services have witnessed fewer contract extensions, lower daily rates, fewer offers and generally less demand for their services.

David Smith, vice-chairman of the IT and Comms group at REC, says:

“Banks and financial services outfits cutting IT contractor hires should be no surprise to anybody because the sector is in trouble. They are trying to re-adjust to the new economic circumstances.”

PCG policy officer John Kell has commented on IT contractors’ fears of being stuck on the bench indefinitely:

“We are seeing a lot of reports on our forums of interviews being harder to come by, and contractors being more inclined to stick with their current client and aim for a renewal, rather than chase a higher rate elsewhere… It’s certainly the case in financial services, the picture for other contractors is not so clear.”

“Companies are re-evaluating their 2008 IT budgets and cost is becoming a much more fiercely interrogated factor of business cases than it was during the ‘good times,’” says PM3 Consulting recruiter Steve Pragnell, adding that their “new business is slightly down on last year, across the board, though, not just in the finance and technology industries.”

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He says that the economic crunch affects contractors in two ways: clients use it to justify reducing rates while workers see it as reason enough to to negotiate. Another factor that will drive the contractors’ pay rates lower is the competition for project management contracts.

“We recently had over 200 applications for a £300 per day PMO role. This is really at the bottom of the range we hire, yet we got a good number of experienced project managers pitching for the work,” Pragnell says. “As the numbers of contractors looking for work grow, inevitably individuals will start to cut their rate expectations so that their CV gets to the top of the pile sooner.”

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