Banks and Government compete for IT contractors

The Government and the UK banking industry could be in direct competition for top IT staff, according to giant group plc, the contractor specialist.

The group predicts this could lead to skills shortages in key areas like project management, as the banks and Government are set to invest hundreds of millions of pounds on IT projects this year

UK banks are expected to spend hundreds of millions of pounds on developing IT systems that meet Basel II capital risk-management requirements in 2005. E-government - the government's requirement that all local and central government services should be available electronically by the end of 2005 - will cost the Government £1.5bn in 2005.

According to giant, IT spending by banks is likely to translate into a surge in demand for IT staff at a time when, it says, unemployment among IT contractors is just 2.8 per cent. With banks unable to satisfy their IT staffing requirements from a pool of surplus labour, they may be forced to recruit from other sectors, possibly leaving the public sector facing skills shortages at a critical moment.

Matthew Brown, Managing Director, giant group plc, comments: "The UK banking industry is ramping up for its biggest IT investment programme since the late 90s. The public sector will need all hands to the pump if it's to meet its very specific e-government deadlines.

"There are very few IT professionals out of work at the moment. Any organisation looking to recruit more staff is going to have to do some determined headhunting - something at which banks traditionally excel."

Research by giant showed that the financial services sector recently regained its status as the biggest employer of IT contractors, knocking the public sector off the top spot. According to giant's research, 21.2% of IT contractors (19.9% six months ago) now work in financial services compared to 20.5% in the public sector (20.5% six months ago).

According to giant, many senior IT staff migrated to the public sector after the dotcom crash. Persuading them to return to the City could be fairly straightforward as the business culture would not be entirely new to them.

Matthew Brown said: "If banks do start offering big money it's hard to see the Government responding in kind. E-government projects tend to be heavily reliant on a number of key individuals who, if poached, could be very hard to replace."