With investment banks’ IT hiring in reverse, the bullish tech recruiters in 2008 are hedge funds…and insurance firms.

The number of IT roles in investment banking fell by 18% in the final three months of last year, compared with 2006. They also accounted for just 37% of positions being advertised in the UK finance sector, compared to 61% a year earlier, according to recruiters ReThink.

John Butterfield, managing director of ReThink, reckons the current i-bank belt-tightening is in line with the dotcom bust in 2000.

It’s not all gloom and doom, though. In contrast with investment banks, hedge funds and insurance firms have been increasing IT hires and the number of jobs is up 36% on last year across financial services as a whole.

James Kennedy, quantitative consultant at recruiters Pathway Finance, says hedge fund hiring remains robust, but it’s mainly at a more senior level.

“Positions for junior quant analysts have slowed, but quant developers who have the skills to implement models are in high demand. Hedge funds have a lot less red tape than investment banks when it comes to taking on new people.”

By comparison, Chris Potter, technology assurance partner at PwC, says insurance hiring is mostly focused on business analyst, project manager and programme manager posts – with software development and coding roles being sent offshore.

Dave Pye, CEO of recruiters Highams Group, says insurance firms are fairly fussy about specific industry experience and won’t necessarily pick up i-banking cast-offs.

The typical salary for a business analyst in insurance is £50k, says Pye, but this can go as high as £75k-£82k. Project managers and programme managers, meanwhile, can expect an average of £55k-£60k, but the right person can command £110k.