London based IT recruitment specialist The JM Group has revealed that despite uncertainty surrounding the investment banking sector, IT workers recently are seeing a pickup in demand from investment banks. JM Group reports that over the last quarter, there was a 12.5 percent increase in demand for permanent IT workers from investment banks.
The UK-based recruiting firm however is quick to note that this increased demand for permanent IT staff contrasts with that of the contract market where hiring has considerably slowed down in recent months.
The Risk of Not Investing in Talent Now
Some industry observers view the stepped up hiring by investment banks as a positive sign. Commenting on the recent higher demand for permanent IT workers, Martin Rennison, Head of Investment Banking for IT at JM, says, “We believe the banks have finally come to a point where they can no longer wait around anymore. The risk of not investing in new talent or new projects is now seen to outweigh the benefits of sitting tight in anticipation of what could happen, especially as they could be in for a very long wait.”
His comments were echoed by Dave Pye, CEO of The JM Group. Pye commented, “With the banks having undergone substantial cost reduction and redundancy programs, we believe these new hires reflect their confidence that they’ve done enough to streamline their businesses for now.”
IT Contractor Hiring Remains Sluggish
In contrast to permanent recruitment, demand for freelance IT workers from investment banks showed sharp slowdown in the second quarter. JM Group revealed that there was widespread weakness in the contract market. During the second quarter, investment banks offered fewer contractor placements, and the pay rates were also lower.
Compared to the second quarter of 2010, IT contractor hiring by investment banks were down 20 percent this year. The JM Group report also found that most of the contracts paid 10 percent less and the second quarter activity among investment banks was marked by “bursts of activity,” rather than a steady flow of IT contracts.
Too Early to Declare an Upward Trend
The surprise increase in permanent IT hiring among investment banks in the second quarter is a positive sign but the demand for IT contract jobs in investment banks continues to be weak.
Given the recent slump in investment banking revenues and plans by investment banks such as Morgan Stanley, Goldman Sachs and Banc of America to cut expenses from investment banking units, it is hard to derive strong conclusions out of this positive report on permanent IT hiring in the just ended June quarter.