IT budgets for 2006 spark hiring growth

Recruiters are forecasting a surge in IT recruitment in 2006 as banks struggle to update their technology systems and keep pace with regulatory changes.

If their expectations are right, the upturn could be impressive. Mark Wilkes, head of the executive search practice at technology recruiter JM Selection, says some banks are predicting a 20% to 30% increase in technology budgets for 2006 compared to 2005. Last year IT spending across banks in Europe increased by just 2.5% according to market research firm Celent.

Wilkes says the regulatory environment is driving investment in new technologies, and this is creating an increase in hiring. "Banks are still dealing with the ramifications of Basle II and Sarbanes-Oxley, and are now having to prepare for Mifid," he says.

Richard Sharp, an account director at recruiter Spencer Rose, says banks are hiring technologists to boost their straight through processing (STP) capabilities. Last year a survey by Z/Yen, a consultancy, found more than half of European investment managers had dropped brokers because of poor operational performance and low levels of STP.

Recruiters predict ongoing interest in technologists to work on derivatives trading and clearing systems. The head of banking IT recruitment at one firm, says the derivatives area still has massive potential: "There's a lot of incentive for banks to devise new derivative products, and the IT systems that support them are crucial."

He says banks will continue to seek developers with derivatives knowledge to work on these systems. Robert Lycett, IT team leader at recruiter Elan IT, says staff with solid C++ and Java knowledge, combined with banking experience, will continue to command high salaries of between 80,000 and 90,000.

Jo Sweetland, recruitment manager for IT banking at Robert Walters, says 2006 will see growing demand for technologists to work on prime brokerage systems, and proprietary trading systems, both likely to be growth areas this year.

Wilkes at JM Selection also predicts growing demand for staff to work on new technologies and systems, such as grid computing, which optimises the use of IT hardware, and voice over internet protocol (VoIP) systems, which will enable staff to conduct telephone calls using internet bandwidth. He says technologists with telephony experience will be highly sought after as a result.