Freelance IT contractors working in the City have reached the £50 per hour pay barrier for the first time since the September 11 2001 terrorist attacks, according to research released by The Association of Technology Staffing Companies (ATSCo).
ATSCo says City IT contractors were last paid £50 per hour in June 2001, just three months before the stock market plunge precipitated by the New York terrorist attacks.
At the peak of the dot com boom in December 2000, IT contractors working in the financial services sector earned a record £54 per hour on average. During 2002, as the market bottomed out, they earned less than £35 per hour.
Ann Swain, chief executive, ATSCo, says: "Pay for City IT contractors has reached a psychologically significant milestone. 2006 could be the year when the ghosts of the dot com era are finally laid to rest and IT pay in the City tops the £54 per hour record set during the height of the boom.
ATSCo says there is a good prospect of continued pay rises in 2006 for IT professionals working in financial services, with demand for IT staff continuing to rise after a year of bumper profits in the City.
The latest survey - which was conducted by iProfileStats, a pay rate statistical analysis company - is evidence of the strong recovery in City IT departments over the last few years, says ATSCo, as M&A-related spending, which slumped after the dot com boom, has been replaced by an increase in IT expenditure on security and compliance work.
Banks spent heavily on IT security in 2005 and will continue to do so this year, says ATSCo. Spending on security accounted for 13% of IT budgets last year, up from 11% in 2004. Research also reveals that pay for IT security experts rose by 22% last year.
Says Swain: "As financial services companies step up spending on security to meet rising threat levels IT security skills are now attracting the kind of premiums reminiscent of Java programmers during the dot com boom."
Furthermore, the impact of new regulatory regimes like Sarbanes-Oxley and Basel II on IT audit and controls has boosted demand for IT staff. Swain says Sarbanes-Oxley has generated huge amounts of work as IT staff have worked to re-align systems and predicts that 2006 will be a year of "frenetic activity" in IT departments as the Basel II deadline looms nearer.