Thanks to a fortuitous combination of factors, investment banking technologists are hot property. Recruiters say the situation is unlikely to change any time soon.
Chris Croft, a consultant at the London office of recruitment firm Huxley Associates, says UBS and Citigroup are embarked on 'massive' expansions of their London technology teams and that Goldman Sachs and Credit Suisse are also making multiple hires.
"We've got 700 open vacancies ranging from junior developers through to senior technology heads," he says. "The pick up began in 2003, strengthened in 2004, and 2005 and 2006 to date have just seen continuous hiring."
Croft attributes the expansion to the need to integrate existing technology systems, as well as the automation of back office functions. "We're seeing a big drive towards automating the whole lifecycle of structured derivative products," he says. "There's a big emphasis on post trade processing."
In the US, it's much the same story. "It's crazy right now," says Guy Pickrell, a consultant at the New York office of banking technology recruiter Nationstaff. "We're certainly as busy as last year, if not even busier."
European regulatory drivers
Rising technology expenditure is driving hiring. According to Celent, a technology market research firm, investment banks' spending on IT systems rose last year following several years of contraction.
Lauren Bender, a senior Celent analyst, says compliance-related spending has the potential to encourage further growth in 2006: "93% of compliance costs are currently people costs - banks are going to start cutting that down and trying to replace it with technology."
The January 2007 deadline for Basel II compliance, and April 2007 deadline for the Markets in Financial Services Directive (MiFID), are key drivers behind compliance-related IT spending, says Bender.
But recruiters point to other factors underpinning technologists' popularity. "A lot of banks are investing in third-party systems that need to be integrated," says Pickrell. "We're also seeing demand for people to work on systems to manage program trades."
Similar factors are at work in continental Europe, where recruiters also highlight the impact of restructuring. Riccardo Malusa, a consultant at Milan-based recruiter DMR-Consulting, says Unicredito and San Paulo-IMI, both of which are embarked on restructuring projects, are among the most active Italian hirers of IT staff.
In France, Jérôme Bonnard, a director at Paris-based RCBF consulting, says Calyon is still hiring IT staff to combine systems following the merger between Credit Agricole Indosuez and Credit Lyonnais.
Bonnard points out that Société Générale is also a significant user of technologists in the French market: unusually, he says the bank develops its systems in-house instead of relying on third party providers.
C++ v C#
While non-core IT functions are increasingly being outsourced to programmers in India, recruiters say there is still strong demand for programmers to work on trading systems, which are still developed or integrated in-house.
On Wall Street, Pickrell says the strongest need is for programmers who combine C++ with an understanding of banking. "Everyone is looking for solid C++ programmers with a genuine understanding of the business."
According to Bonnard, C++ is also the hot ticket for technologists in banking Paris. "There are plenty of jobs in technology," he says. "Banks are looking for programmers who know C++ and Java. It seems there's more need for .NET and C# in London."
This is confirmed by Croft at Huxley Associates. "A lot of banks are looking to replace older technologies with C#," he says. "It's getting increasingly hard to find C# specialists inside the banking sector."
Offshoring to increase in continental Europe
Celent's Bender says the big international banks have largely completed the process of shifting non-essential IT jobs to places like India. "In the US and the UK, most of the off-shoring and outsourcing has been done," she says. "Large US banks and global banks like Deutsche Bank, UBS and Credit Suisse have been very active in this area."
However, Bender says the same cannot be said for Italian banks, French banks, and the smaller German banks. Although she says Italy's banks are likely to be too engaged with internal restructuring to contemplate shifting technology jobs to India anytime soon, offshoring is apparently on the cards in France and Germany.
"The German banks are very aware that they have an unsustainably high cost base," says Bender. "We are going to see banks like Dresdner Bank and Commerzbank slowly and quietly proceeding with offshoring in the near future."
She forecasts that offshoring in France will be a more protracted process, but inevitable nevertheless. "It's a very sensitive issue in France. We will probably see technology jobs consolidated in London and then offshored from there."