If you’re looking for a back- or middle-office contract role at a big international bank, Hong Kong is fast emerging as an attractive destination.
Once a backwater for budding contractors, the territory now boasts a steady flow of contract jobs and a workforce that is slowly shedding its traditional reluctance to short-term assignments, largely thanks to rising pay rates and generous benefits.
In a survey of 25 job markets carried out last month by Manpower Group, Hong Kong ranked as the best place for employing contingent workers, based on factors including talent availability, labour regulation and productivity. Recruiters in Hong Kong say global banks are taking advantage of this favourable climate. “We have seen a steady recent increase in the use of contractors and we are expecting this to continue,” says Garrett Tardrew, manager, banking & finance contract division, at recruiters Robert Walters.
Although Asian deal-flow is picking up, the Hong Kong offices of international investment banks are still under cost-reduction pressure from their headquarters. Using contractors in the back office is a comparatively quick way to cope with increased deal volumes without adding to headcount costs and without going through the arduous sign-off processes often required for permanent vacancies, says Lancy Chui, regional managing director, Manpower Group Greater China.
“The instability of the markets quarter-on-quarter has generated concern about how to manage growth,” adds Kate Harper, director of Hong Kong financial services at recruitment firm Connected Group. “Contractor strategies from Western markets are being rolled out across Asia.”
New financial regulations, such as the Dodds-Frank Act, are also creating work for compliance contractors on “short-term remediation projects”, says Harper. And as banks move permanent back-office jobs away from costly Hong Kong and into locations like India and The Philippines, banks need short-term staff to help them manage the transition.
Tardrew says line managers at banks are becoming increasingly keen on a “try before you buy scenario”. “Many banks now have a policy that when a permanent person leaves they can only be replaced with a contractor. While permanent positions usually have a probation period, some banks feel this is not sufficient as during the first three months employees are primarily getting up to speed.”
Contractors in Hong Kong are typically paid per month for fixed-terms of between six and 12 months. Their monthly rates, meanwhile, are rising. As recently as 2010 they earned less than payrolled employees doing the same job, but in 2013 they finally achieved salary parity, according to recruiters.
Only senior contractors in Hong Kong, however, are able to out-earn permanent staff – in contrast to in mature contracting markets like London and Sydney, where contractors at all levels routinely received more money. “Regional leads for regulatory programmes, for example, can achieve annual pro-rata pay of up to US$320k, plus a completion bonus, putting them well above many permanent people,” says Harper.
Hong Kong contractors enjoy generous benefits (medical insurance and paid holiday and sick leave are the norm) that often exceed both local statutory minimums and the scant perks given to contract workers in Western markets. This is helping to attract candidates who would otherwise shy away from on contracting. “In the banking sector, benefits and allowances tend to be even stronger than in other industries,” says Chui from Manpower.
Banks on the hunt for contractors still face challenges in Hong Kong. “Some job seekers feel that taking a contract position signals that they were not good enough for a permanent role. This is untrue, but it’s sometimes a perception,” says Tardrew from Robert Walters. “And candidates in Hong Kong are sometimes still heavily influenced by their parents, whose advice is normally to take a permanent role because it offers security, even if it’s a dead-end job.”
A volatile job market is, however, helping to break down cultural barriers against contracting. “Due to the large redundancies over the last few years in Hong Kong, people are realising that a permanent position does not guarantee security,” says Tardrew.
Financial professionals in the territory increasingly see contracting as a potential “foot in the door” to the bank they want to work for, having witnessed their peers landing permanent roles at the end of their fixed-terms. “We now find very little resistance to contract roles, especially at top-tier European and American banks,” says Tardrew. “In some cases candidates are even willing to move from a permanent role if the contract one can better assist in building their career.”
In a marked contrast to previous generations, young financial professionals in Hong Kong are now using contract roles to "try out" different banking roles before settling on their preferred function, according to Harper from Connected Group.
At the senior end, the number of “career contractors” – people who choose to move from project to project – is increasing, all be it from a small base. “In previous years the contract market was predominantly fuelled by low-skill, low-wage employees but as more banks embark on projects to hire senior, high skilled, strategic contractors, expectations on reward will shift and businesses will need to address this change in order to attract and retain talent,” says Harper.