A poll of 4500 IT contractors has found the median hourly rate for IT contractors in the financial services sector has slipped to £44 from £50 in the fourth quarter of 2007, according to the Association of Technology Staffing Companies (ATSCo) and CV specialist iProfile.org.

It is thought the 12% slump is primarily due to new contracts being signed at lower rates rather than renegotiated deals.

ATSCo says this is the first fall in pay since the credit crunch began last August and the first drop in IT contract rates in the City since 2002. The Association says this is likely to be a result of banks cutting costs by shelving projects that are not expected to deliver an immediate return on investment.

Ann Swain, chief executive, ATSCo, says: "Contractors are typically first into and first out of any recession. The $64,000 question now is whether falling demand for IT skills in the financial services sector will ripple as far as permanent staff."

But Swain says that unlike the downturn at the beginning of the millennium after the dotcom bust, there is not a great surplus in IT skills and this means there is unlikely to be large technology lay-offs.

In fact the crunch could bring benefits to IT staff, says Swain: "Market turbulence has exposed many latent problems that banks have with their back office clearing systems. These systems will need to be overhauled and updated."

Karl Gregory, marketing director, iProfile.org, says the credit crunch and the Société Générale scandal "have both led to significant demand for IT professionals with experience in areas such as risk management and compliance systems".

"Post-merger integration of IT systems will also generate demand as the crisis accelerates consolidation in the financial services sector," adds Gregory.

In July UK bank Barclays cut salaries for IT contractors working across its operations by around 10%. Nomura International - the London-based arm of the Japanese investment bank - has also moved to cut contractor pay.