eFinancialCareers

IT contractors could be the first for the chop if banks wield the axe in technology divisions.

“The last time there was a downturn was in 2000,” says Michael Lapin, managing director of IT headhunter ML Search. “Then there were sweeping cuts of contractors. Now, they might be converted into permanent positions, or they could be let go and forced to look for other work.”

Richard Bentley, head of technical services at software house Apama, agrees: “Because of the latest credit crunch announcements, there are expectations that the hiring market will ease up a little. This traditionally hits contractors as we see them start looking for permanent positions, so you see an influx of supply.”

There doesn’t seem to be any shortage of permanent positions for contractors looking to make the move. A recent financial services report by PriceWaterhouseCoopers suggested that investment in IT is a priority for both investment banks and insurers.

Meanwhile, Lapin reckons that the average bank in Europe takes on 200 people a year – and is set to continue doing so, which translates as thousands of jobs across the City as a whole.

Still, contractors have been feeling the squeeze lately anyway, says Lapin: “The ratios aren’t as crazy as they used to be. It used to be that some banks were running 30% permanent to 70% contractors. They’ve really tried hard to convert or get rid of long-term contractors. I suspect that many of the banks are still running a 50-50 split.”

Contracting used to bring in the big bucks, but headhunters say that the difference is no longer that great. For example, an experienced project or development manager can command £1,000 a day. The average contractor works 200 days a year, which is obviously £200k per annum. The same position on a permanent basis pays £170k, and when you add benefits like pension, bonus and holiday it’s more or less even.

However, Paul Thoma, director at IT headhunter Garthorne Associates, says contractors aren’t dead yet: “At the moment we’re hearing about increases in contract hiring for 2008, in order to keep staffing more flexible and to counteract tighter recruitment budgets.”

He also claims scepticism about bonuses means more movement generally: “Because of bonus uncertainty, many candidates are looking for new roles now, and if the opportunity and pay increase is right, some are willing to forgo their 2007 bonus in order to make the move.”