Credit crunch leaves IT contractors seeking work

Joblessness among IT contractors is on the rise as a result of the credit crunch, according to a new report.

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Joblessness among IT contractors is on the rise as a result of the credit crunch, according to a new report.

The percentage of IT contractors out of work hit 5.5 percent this month, after a two-year low of 4.4 percent at the end of 2007, according to research by Giant Group, the contractor provider.

Job security is a major concern for contractors. When they were asked to rank the criteria they valued most when looking for work, 64 percent put job security at the top compared to 59 percent in the first quarter last year.

But the long-term joblessness rate of 5.5 percent is historically “still very low”, Giant pointed out.

Last week, IT supplier Fujitsu Siemens sent a chill through IT teams by predicting that IT departments would halve in size in a decade. But the news could be seen as promising for contractors, who would pick up work previously performed by company IT departments.

The rise in the percentage of contractors without work for three months or more is likely to be worst hit by banks freezing non-essential IT spending and putting contract renewals on hold, according to the Giant report.

“The post-9/11 downturn saw IT jobs cut across all areas in the City," said Matthew Brown, managing director at Giant. "While we are seeing a rise in joblessness among IT contractors at the moment, most financial organisations have managed their contractor resource much more efficiently since the last downturn, so IT departments have far less fat to trim than in 2001-02."

“Unlike the dotcom boom there is no sense that the economy is overstaffed with IT workers. They are working pretty much at capacity.”

Brown said there was a rising demand for IT skills in the areas of risk management and compliance. “If anything the credit crisis and the Société Générale scandal will accelerate this process, rather than lead to curbs on spending,” he added.

The research also revealed that the percentage of contractors expecting their earnings to rise has jumped from 71.7 percent at the end of last year to 73.9 percent, prompted by the tight supply of skills.

The news follows a Harvey Nash report that IT bosses in the US are better paid than ever, but are increasingly unhappy with their work.

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