Banks' demand for full-time IT staff may be slowing as bonus time approaches, but recruiters say their appetite for contractors is ramping up.
"The fourth quarter is always busiest for contractors," says Andrew Howard, head of the IT contract division at recruiter Astbury Marsden. "From September and October banks get into bonus pool protection mode. Most avoid taking on additional permanent staff until bonuses have been paid out."
"Demand for contractors often rises at this time of year," says Richard Lett, manager of the banking temporary team at recruiter Jonathan Wren. "There are usually headcount and cost issues around hiring permanent staff."
Adding systems developers or project managers in the fourth quarter is an expensive business. Recruitment firms typically demand a fee of around 20% for finding permanent staff, and any technologist worth their salt will also ask to be compensated for losing their end-of-year bonus when they move. "The cost can easily run into six figures," says Howard.
At 500 to 700 a day, contractors can seem cheap by comparison, despite costing some 20% more than their permanent colleagues. Recruiters say the potential savings are driving recovery in the sector: "The contract market is better now than it has been over the last couple of years, but has yet to return to the levels of three, four and five years ago," says one.
Senior technology specialists at investment banks say fees paid to IT contractors have little or no impact on bonuses for full-time technology staff. "Contractors don't deplete the bonus pool," says the head of trading technology at one bank. "The budget process for setting bonuses is completely disconnected," he adds. "At this time of year we're more likely to hire a contractor than hire someone and pay a full year's bonus for a few months work."
IT contractors working at investment banks rarely receive bonuses, although recruiters say banks will occasionally pay a lump sum to encourage them to complete work on critical projects. Some, such as Royal Bank of Scotland, are rumoured to withhold part of contractors' daily rate until projects come to an end, something the bank was unable to confirm or deny.