Battered banking contractors seek public sector sanctuary

Faced with rate cuts, shrinking job opportunities and ultimatums to take a permanent role, IT contractors in the financial sector are increasingly looking to the public sector for new opportunities.

It’s been a bad time to work as an IT contractor in banking – rates have remained stubbornly low since the blanket pay cut in 2012, contracts have been getting shorter and more banks are trying to cut costs by convincing expensive contractors to take a permanent role.

The public sector always looks more alluring in times of strife, and it does again, according to research from recruiters Giant. Of the finance contractors it surveyed, 51% were now working in the public sector, it suggested.

“Investment banks are still being cautious over contract recruitment,” said Matthew Brown, managing director of Giant. “We’re generally seeing a flattening of recruitment in the sector as the banks are forced to be much stricter when it comes to taking on new hires.”

By contrast, the public sector is taking on more IT contractors in response to the increased cuts among permanent technology staff, it suggests.

The trend of moving out of finance is more pronounced among the new-comers to the industry, believes Martin Rennison, head of the technology practice at recruiters The JM Group.

“The contract to perm conversions within the banks have largely been completed, contracts are being renewed on a short-term basis, but we’re starting to see some fall out from the financial sector,” he said. “People who moved into banking during the good times had been trying to keep an unblemished CV of financial sector experience, but have now decided to shift across to the public sector.”

And yet, there are some bright spots in banking IT for contractors. Retail banks, building their online banking platforms, are taking on record numbers of contractors, says Rennison, including those with e-Commerce experience from the investment banking side of the business. What’s more, there’s a big push for temporary project managers and business analysts, he said.

There’s also a sustained peak for contractors to work on business change and mandatory regulatory initiatives, said Ben Cowan, director at recruiters Astbury Marsden.

“It’s slowly shifting towards a candidate-driven market – candidates are being given multiple offers, pay rises are available in some cases and there’s greater demand than supply, particularly for regulatory roles,” he said. “The banks have yet to fully acknowledge the shifting dynamic.”