IT contractor rates are (finally) on the increase

IT contractors in the financial sector are, for the first time in a long time, in a relatively good bargaining position. The result is that day rates, which have been depressed since 2008, are on the up again.

With most banks hiring permanent technology staff throughout 2010, day rates for contractors have been slow to recover from the blanket cuts imposed during the height of the financial crisis.

Now the situation is changing. Recruiters are reporting a surge in contractor recruitment this year, something echoed by pre-employment screening firm Powerchex, which claims there's been a 70% upswing in contractor recruitment since this point last year.

"Banks gorged themselves on permanent recruitment in the first half of last year, but most have had to turn to contractors in 2011, because permanent headcount has been hard to come by," says Justin Willis, director of Bright Purple Resourcing. "Projects which would normally have been started in November are just kicking off now, and contract resources are being deployed."

Day rates are creeping up. Willis suggests that Java developers within equities, equity derivatives and prime services are being offered 500-750 a day, but at the (very) senior end, 1,200 a day is being offered to technologists working on an interim basis as a stopgap for banks hunting for a permanent recruit.

Contract recruitment has almost doubled since this point last year, claims Ben Cowan, head of the contract desk at Astbury Marsden, and he expects this to continue into the second half of 2011.

"The point to emphasise is that when contract rate rises are being demand on renewal of contract, few banks refuse because a lot of contractors are deployed on critical projects," he says. "Most people are able to secure a 5-10% uplift."