Don't panic - Lloyds cuts don't mean IT contractor demand is falling through the floor

The fact that Lloyds Banking Group is culling 500 London-based IT contractors as part of its latest redundancy announcement could be taken as another sign of the impending slump in demand for temporary financial services technology staff.

It does, after all, come after similar moves by RBS, Standard Life and Barclays.

Volume recruiters specialising in banking contract IT recruitment are already reporting a steady stream of CVs coming in from those at Lloyds. Sadly, this comes at a time when other large UK retail banks are also losing their appetite to hire.

The Lloyds TSB Group Union is predicting that UK IT sector is going to be "flooded with highly skilled professionals over the next 18 months".

However, headhunters also claim that Lloyds has been steadily and consistently recruiting IT contractors for projects around treasury and trading technology throughout this year and that this shows no sign of stopping.

Overall, despite recent fluctuations, the financial services contract market remains relatively buoyant, suggests Lee Ballen, head of the IT contract desk at Huxley Associates.

"The saving grace for people coming out of the retail banking space is that investment banks are still recruiting," he says. "In theory, it's a relatively easy transition, particularly if you have a range of financial services experience behind you."

The likes of RBS, Morgan Stanley and HSBC are also still indulging in relatively prolific contract recruitment, suggest recruitment sources.

"If anything, we've seen the market switch more towards contract recruitment at this point in the year when it's difficult to get permanent sign off," says James Richmond, sales director at recruiters Cititec. "There's ongoing demand for developers, business analysts, testers and project managers around trading technology."