Government, banks to fight for best contractors

One in four IT contractors in the UK is employed by the government, making it the biggest user of freelance IT consultants in the country. But the public sector could soon find itself in a bidding war with the banks for the most talented contractors.

The government has more than doubled its share of usage of freelance IT consultants over the last two years, according to research from contractor services company Giant Group.

Its survey of 2,500 contractors found that 27 per cent now work in the public sector.

The financial services sector is the second biggest user of contractors, with 24 per cent of the market - up from 19 per cent in 2003. In contrast, the telecoms sector has slumped from second to fourth place, now using 12 per cent of the contractors compared to 21 per cent in 2003.

Giant Group's managing director Matthew Brown said the willingness of the public sector to use external consultants "has surpassed all expectations".

He said in a statement: "The public sector has always been the poor relation in terms of its utilisation of temporary IT staff but efficiency drives and increased scrutiny of major IT projects have persuaded civil servants of the necessity of bringing in private sector expertise."

As demand from government continues and the City ramps up spending on security and compliance, the two sectors will be going head-to-head for the best staff, he predicted.

Brown added: "With the need to control public finances pressing, and the City's requirements for IT contractors growing, the government could find itself locked into a costly bidding war.

"If key IT personnel are poached by the City, there could be serious consequences for the government's IT agenda."

He said mergers and acquisitions, spending on Basel II and data security will boost demand for temporary IT staff from financial services organisations.

The rollout of new networking technologies, such as voice over IP and 3G mobile services, could also create a "long-awaited" boost in demand for consultants in the telecoms sector, according to Giant.