Will IT contractors leave in the wake of rate cuts?

The contractor route still offers plenty of opportunities for techies in the financial sphere. In fact, the investment banks which imposed a 10% rate cut may have shot themselves in the foot, as contractors jump ship in pursuit of better paying roles.

"Contracting is busier than 'perm' due to the uncertainty in the recruitment market and the reluctance of employers to make long-term commitments," says Marilyn Davidson, director of the Association of Technology Staffing Companies (ATSCo).

Davidson says this could work against cost-cutting banks: "Some of the banks imposing cuts in contractor rates are forcing contractors to seek assignments elsewhere, partly because of the financial impact but also because of the way this has been handled."

The hall of shame so far includes Barclays Capital, Deutsche Bank, Lehman Brothers, Merrill Lynch, Nomura International and RBS, all of which have sliced around 10% off rates. The banks sent out e-mails about the cut to recruiters, who then had to pass the news on to the contractors.

James Richmond, sales director at recruiters Cititec, says: "There has been a bit of a domino effect in rate cuts across the City. Some banks have been more aggressive than others and have therefore put themselves at risk of losing contractors. If you're a technologist with a niche skill-set you could work for any bank, anywhere in the world, so what's to keep you here?"

Julia Bosworth, manager of the IT contractor division of Project Partners, says: "There are definitely a lot of opportunities for contractors going forward and I wouldn't be surprised if a lot of them move to where the best money is."

How can contractors make themselves indispensable? Bosworth says there's particular demand around third-party vendor systems like Charles River, Latent Zero, Simcorp Dimension and Sophis.

Richmond adds that knowledge of front-office trading systems like Murex, Summit and Calypso is also sought after.