Before the recession in June 2008, London accounted for 34 per cent of all IT contracts and jobs created in the UK.
According to research by ReThink Recruitment, the IT market in London is rebounding from the financial crisis far stronger than the rest of the UK. It says that, as well as growth in demand in financial services, London is also benefitting from a boom in social networking IT start ups.
Michael Bennett, Director at ReThink, said: “London is quickly emerging as a major hub for high-tech IT start ups – with several heavy hitters including Cisco and Google recently investing in Shoreditch. In comparison with other high-tech centres, London still offers relatively cheap rents and has consequently attracted very specialised tech firms looking to recruit qualified IT candidates.
“Venture capital firms – who are key funders for most of these tech start-ups – are increasingly finding that investments in Silicon Valley are often over-priced. With speculative talk of a second dotcom bubble common, many are deciding that Europe and London in particular is a safer place to invest.”
Michael Bennett said: “London has a large number of banks and financial services firms headquartered in the city, and many of these responded to the downturn by cutting IT departments. When business volumes increased, so did requirements for qualified IT staff.
“Regulatory pressure and greater reporting requirements are also forcing banks and other City firms to strengthen their compliance and risk management IT systems. Many are restructuring their front office IT systems to ensure greater transparency, which could explain this on-going demand.”
ReThink explains that Solvency II regulations will impose new capital and risk management requirements. These will require insurers to update their internal risk models, databases and reporting systems – all of which will require extensive investment in IT. Solvency II is due to come into force on December 312012.
The report also suggests that the unprecedented wave of mergers between financial institutions brought about by the credit crunch has produced a backlog of work for IT departments, who are under pressure to maximise operational efficiencies.
Public sector cuts
According to ReThink, UK regions outside London and the South East have a heavy reliance on the public sector to create IT jobs, and this could be a major factor in explaining the loss of IT job/contract market share.
Michael Bennett concluded: “Public sector recruitment freezes have really taken hold. IT projects have been abolished, and consequently demand for IT skills has been very subdued.”
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Susie Hughes © Shout99 2011