Will contractors find sanctuary at hedge funds?

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Hedge fund giant Man Group is set to double the amount it spends on technology going into 2009 and has employed contractors to carry out new projects. Does this mean that the hedge fund space could provide much-needed opportunities for IT contractors from other areas of finance? Sadly not....

In the second half of 2008, Man Group has spent $10m on technology, up from $6m in the first half of this year, and it expects to shell out a further $20m on IT in the first half of 2009.

Contractors are seen as a way of carrying out these projects without the long-term expense of permanent staff.

"We have grown our temporary headcount, as by using people on short-term contracts we can access the technical expertise we require while maintaining our cost flexibility," a spokesperson said.

In spite of spending around 40% less overall on IT going into 2009, hedge funds are still keen to gain a competitive advantage through better automation and developing superior trading systems, according to a recent Tabb Group report.

You would have thought many companies would follow Man's example and bring in contractors to undertake the work, but this doesn't seem to be the case.

Andrew Keene, director of technology recruiters Thomson Keene Associates, tells us: "The larger firms have a more volume-based trading environment and therefore technology is more crucial to them. However, while the contractor market is more active than the permanent side, it's by no means busy."

Similarly, Paul Tate, senior consultant at hedge fund IT recruiter Options Technology, thinks hedge funds have already begun exercising 'cost flexibility'.

"I could name you two or three funds that have cut contractors in the last week alone," he says. "There's been a complete turnaround in the market recently and most firms are holding off taking on people until the first quarter of next year at the earliest."

The (slight) good news is that IT contractors in hedge funds are not subject to the across-the-board rate cuts imposed on their investment banking counterparts: Keene reckons hedge funds are still willing to pay the same rates for good people.

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