Financial IT contractors may have grounds for cautious optimism

Financial IT contractors may have grounds for cautious optimism as IT investment by financial institutions is to grow by 60% and hiring in London is up by 20%.

Financial IT contractors may be set to enjoy a more prosperous second half of 2013 as financial sector firms increase IT investment, and hiring in London’s financial sector starts to recover.

The latest Confederation of British Industry (CBI)/PricewaterhouseCoopers (PwC) Financial Services Survey forecasts that IT investment will grow by 60% over the next quarter. And June 2013’s Morgan McKinley London Employment Monitor shows that hiring in London’s financial centre increased by 20% compared to the previous month.

However, despite these positive figures, IT contractors still have a long way to go before they can expect contract numbers and rates to grow significantly. A large proportion of the huge increase in IT investment reported by the CBI/PwC is playing catch-up: projects that have been stalled or cancelled are being restarted and revived.

And the caveat to Morgan McKinley’s positive data is that the number of new financial sector roles being created in London is down by a fifth compared to the same period last year. So far, in the first six months of 2013, there have been 9% fewer financial sector vacancies than in the same period last year.

On a more optimistic note, Morgan McKinley Financial Services operations director Hakan Enver believes that “there is still scope for market recovery over the remainder of the year”. Less positively, Enver warns that the recovery “is very much dependant on macroeconomic factors stabilising”.

The UK’s financial sector is IT contracting’s second largest customer, after software developers. So, what happens in London and Edinburgh and the UK’s other financial centres impacts directly on contractor prospects.

That’s why the second statistic from the Financial Services Survey is much more encouraging. According to the CBI and PwC, “investing in IT is expected to be the most important element of growth strategies over the next 12 months”.

That’s a pretty bold and exciting statement for IT contractors. After five years of shrinking markets and falling rates, financial IT contractors may be facing a renaissance of demand for their services.

That IT is thought to underpin the growth strategies of global financial institutions presents opportunities for contractors who have the right combination of technical and business skills.

Those contractors effective at translating strategy into action in the form of IT that delivers competitive advantage to their clients may have cause for more than cautious optimism. We could slowly be turning a corner with financial sector and financial IT experiencing the beginnings of a recovery.

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Shams Urrehman
MD SkyTax

Hi, I'm Shams Urrehman, Qualified accountant since 2005 and Director at SkyTax Ltd since 2009. I have been advising freelancers, management consultancies, IT contractors, SME’s and other businesses about accounts and tax planning.

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