IT contractors financial services were hit with the double whammy of declining pay and reduced job options during the first half of this year. Now, however, demand is slowly picking up once again, but any rate rises are restricted to very specialist sectors.

Following an uptick in the number of jobs being offered to contractors in July, August looks like maintaining this positive sentiment, suggests Alexandra Kelly, managing director of Powerchex, a pre-screening firm for financial services.

“There was a big uplift, which lasted for approximately two and a half weeks in August, but this has slowed down slightly recently” she says. “However, clients are still being very careful with budgets, especially when it comes to contract staff, so I think there needs to be more of a sustained uplift before rates begin to shift.”

From the middle of last year, investment banks pared back daily rates for IT contractors by 12-15%, and Kelly says firms within other areas of financial services have also done so this year.

However, while banks might be generally reluctant to increase rates, there are specialist areas where they’re willing to shell out, suggests Paul Elworthy, associate director in the IT and banking finance division of recruitment firm Hudson.

“We’re seeing increased demand for contractors with product knowledge around FX and rates, commodities and equity derivatives,” he says. “Banks are more willing to negotiate on rates in these areas and they’ve increased by around 10% compared to the end of 2008. But this is still a long way from the highs of two years ago.”

James Parker, director of the technology and consulting division at Robert Walters, says that generally most banks are refusing to increase rates.

“But if clients are looking for a very specialised contractors to look after business critical systems in the front office, they’re often willing to pay more because there are fewer people with this expertise,” he adds.