City recovery boosts IT contractor demand and rates

Demand and pay rates for UK IT contractors is on the up again, with unemployment falling and rates rising in some sectors for the first time in four years, according to new research.

The quarterly skills survey by the Association of Technology Staffing Companies (ATSCo) reveals that the City is one area showing signs of recovery, with IT freelancers in financial services companies seeing pay increases of two per cent in the last six months of 2003.

Unemployment fell by a third to 17 per cent and those working in technology companies saw their pay packets get fatter than most, with average pay rises of between six and nine per cent.

Ann Swain, CEO at ATSCo, said in a statement: "Financial services pay rates have lagged behind the upturn in other sectors, particularly government. It now seems as if we are seeing the first glimmer of recovery in the sector that fell the furthest in the stock market crash."

New financial regulatory requirements such as the Basel II Accord are driving demand again as firms begin to implement the necessary IT changes, according to ATSCo. Those benefiting most from this demand are datawarehouse architects, who have seen their pay rise 35 per cent from £40 to £54 per hour in the last six months.

In the tech sector itself, the report says the increase in technology company flotations is evidence of a thaw in the freeze on the financing of IT firms. The skill 'hot spots' in this sector in the last six months were IT freelancers in electronics, software development and aerospace, who saw pay rises of nine, six and five per cent respectively.

Swain is predicting that the upward trend for demand and contractor rates will continue throughout 2004.

"As contractor unemployment falls, wages should continue their upward trend as the pool of reserve labour dries up," she said. "IT departments now need to invest in infrastructure. The bottom line is the average corporate PC and its software is reaching the twilight of its useful life."

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