Guest comment: Why the IT boom won't turn to bust

Rob Lycett, consultant in banking technology at Astbury Marsden on why banks won't be cutting banking technologists when the current boom comes to an end.

There's been extensive hiring across City IT markets this year. The last time we saw hiring at this level, in 2001 and 2002, buoyancy was followed by a bloodbath in which banks cut IT operations dramatically in an effort to cut costs. Great swathes of people who were previously in strong positions suddenly found themselves on the bench.

Are we heading in the same direction again? I think not.

I believe IT departmental heads have learnt from their previous excesses: this time they've hired prudently. Many hires have been for offshore sites to save costs - such as UBS and Barclays Capital hiring for Singapore, or even JP Morgan in Glasgow.

They're also hiring more intelligently and strategically. A well-known European investment bank has used a system whereby they've recruited fewer people, but made sure that those they've hired have been more senior and able to perform more functions.

Under this model departments that may previously have comprised 20 people are now able to operate with just 12.

Banks will spend and spend

At the same, the outlook for next year appears favourable. IT investment is likely to persist, with forecasts for 2007 spending looking bullish. And as time progresses, many individuals with IT skills are more aligned with the business than was possible in the past. IT now plays a part in specialised functions such as automated trading, high-volume algorithmic trading and volatility trading.

As a part of the front office, these come under the remit of business spend. With IT now so closely interlinked with revenue generating areas, there's every reason to believe the current level of spending will last.

Hiring freezes will quickly thaw

This is not to say that there are no hiring freezes in place currently. But this time of year is simply an ideal time for banks to take stock of spend, ascertain which areas need beefing up, which areas are static, and to discuss any potential offshoring plans.

Despite this, there are still pockets of recruitment in IT throughout the front, middle and back office - even for additional hires and not just replacements - which would not be the case were over-hiring an issue.

In conclusion, I believe this is a busy market that perpetuates and fuels itself. IT continues to be of paramount importance, more so in the front office than ever, and increased IT investment will, almost undoubtedly last.