Crystal Umbrella

UK contractors working in the finance sector either through umbrella companies or their own limited companies may be somewhat perturbed by a new report from the pre-employment screening company Powerchex. Figures contained in the publication indicate that the number of job offers made within this sector of the economy went on falling through October, continuing a gloomy trend.

The decline in job availability wasn’t precipitous, thankfully, but it hardly makes for comforting reading: job offers fell by five per cent during the month, appreciably less than the depressing ten per cent decline seen in August but a little up on the four per cent drop recorded in September.

Commenting in the figures, the Managing Director of Powerchex, Alexandra Kelly, believes that the financial services sector is “tightening its belt” vis-à-vis recruitment, even though it showed signs of rallying during the first half of 2010. She thinks that the government’s recently announced spending cuts may well be starting to take effect, reversing the trend seen at the beginning of the year when many financial companies started to take on new people.

The picture isn’t an entirely dispiriting one, however. The report also suggests that recruitment rose by 17 per cent in the field of IT contracting, by 20 per cent amongst stockbrokers and by a vigorous 33 per cent amongst investment bankers. One can only hope that these trends will extend shortly to other roles in the sector. The jury, however, is yet to deliver a verdict on the real economic effects of the government’s recent decisions.

The results of the latest Powerchex Annual Pre-Employment Screening Survey are in and they show that almost one in five job-seekers are lying to their prospective employers. The research is based on questions posed to 4, 735 job-seekers within the financial sector. According to Powerchex 19% of those seeking work lie on their CV and young people under 21 are now 30% more likely to lie on their CV than they were this time last year. Moreover, the research showed that IT contractors with less than factual CVs had increased three-fold to 18% over the past year.

Most young people surveyed stated that they were likely to change their academic qualifications, for example changing a 2:2 degree to a 2:1. Other job-seekers surveyed said that they would be economical with the truth regarding previous job titles and duties to exaggerate the responsibilities they had held. Others lied about their reason for leaving their previous employment.

Managing director of Powerchex, Alexandra Kelly commented: “This is the second year in a row there has been an increase in the number of candidates lying to recruiters. The pressure of the recession job market seems to have led more applicants to believe they should lie or make embellished claims to get jobs.”
Emma Entwhistle from IT staffing firm Crimson Skills, in an interview with Recruiter, said that recruiters needed to take the time to understand the industry, in order to identify those candidates who are being less than truthful.

She continued, “I have been in IT recruitment for 15 years. The way that most recruitment works is on buzzwords. It takes a long time if you are non-technical to keep up to date with technology. You have got to put the time in as a recruiter to keep your knowledge up to date and I think that is where a lot of recruiters are falling down. Get a proper appreciation of what contractors do rather than recruiting off buzzwords. Properly understand the role and don’t just recruit off the job spec.”

New research has suggested that the worst effects of the current economic downturn could be at an end for financial IT contractors. Pre-employment firm Powerchex carried out this research which showed that in April and May IT contractors were offered double the amount of jobs in financial services as they were in the first quarter. An increase of 23 per cent was noted in insurance employment opportunities and 19 per cent in the banking sector.

Commenting on their research, director of Powerchex Alexandra Kelly said, “Most firms in the sector have an official freeze in recruitment; however firms continue to recruit selectively. We are seeing a split in strategy amongst firms that operate within financial services. There are those companies that are not actively recruiting and only replacing people who leave critical roles, and on the other hand there are those companies who believe now is the time to position themselves to take advantage of any upturn by hand picking new staff from a large and talented pool of people.”

Sanderson is an IT and business change recruiter whose managing director, Nick Walrond, interpreted this new data. He said that while there have been some indications of improvements over the past two months in comparison with the previous three, there is still no comparison to the buoyancy in the jobs market this time last year.

He continued, “A lot of organisations are beginning to look at professional roles in the contracting space. A number of mergers and acquisitions and takeovers in that market is driving the need for business change professionals, such as project managers, and integration specialists.”

Redundancies have been announced by five of the largest employers in financial services. This contradicts predictions that the financial services industry is on the brink of recovery.

Powerchex, a technology staffing business, commented, “We have not seen the end of this recession yet, and the repercussions to the opportunities [for IT staff] may end up being much more severe than what we see now”. They are predicting that contracted IT workers will soon see a reduction in their pay, alongside a reduction in the work which is available to them. Managing Director of Parity resources, Alan Rommel commented, “Rates are being cut everywhere. This is especially true in financial services.” A top financial institution said that IT contractors had been asked to take a 10% pay cut which was not met with any opposition prompting them to wish they had suggested 20%. The marketplace is also now saturated with IT contractors looking for work with far fewer contracts to fill.

ABN Amro is merging with Fortis, and as a result of this 6,500 staff are to be made redundant as a cost cutting exercise. Credit card company, American Express have announced job cuts of 4,000 due to the “economic outlook”. Part-nationalised banking group Lloyds is planning to create 300 jobs to reduce their job cuts to 325 posts but this has not satisfied unions. They are accused of making decisions in the short term without taking account of future business needs. This is also the case with insurance company Legal & General who are cutting 560 jobs across their three processing centres. At Barclays 350 full-time IT workers are being made redundant.

According to Powerchex, the resulting effect on the market is that, “companies are looking to the market for better quality candidates to replace permanent senior IT posts. The reality is that [financial] firms are only taking on new people if they have a new project, and at the same time, they are [looking at] keeping their existing contractors [for] longer.”

After a seemingly endless amount of pay cuts and a sector-wide rise of unemployment for contractors in the first quarter of 2009, recent findings show that job offers for financial IT contractors are on the increase, receiving a 100% boost in March.

According to financial staff screener Powerchex, the demand for contractors in the financial sector has increased steadily since the massive slump in December 2008, when work supply fell by 75%. January and February saw demand for IT contractors increase by 30% and 11%, respectively.

The news may seem a stark contrast to the job cuts suffered across the sector during March, but Powerchex’s Alexandra Kelly explained to Contractor UK that many financers have decided to return to development which had previously been shelved in an effort to cut costs at the end of last year, thus finding themselves in need of system developers. Another source of increase in IT contracts is said to be the Financial Services Authority who, in compliance to its many new regulations, also require IT systems to be developed.

Additional research by agents at Joslin Rowe shows the pace at which financial services hires staff has doubled since September last year, the least affected jobs being in the compliance, risk and audit roles.

“Tracking the time to hire of temporary staff is an excellent temperature gauge,” the firm told Contractor UK. “If temporary recruiting speeds up it’s a strong indication the market is on the turn.”