Investment banks to prune tech teams as credit crunch bites?
As banks continue to digest all that crunchy credit, there are signs that tech teams won't be immune to layoffs.
A recent report from the Wall Street Journal cited analysts and people close to the mutual funds giant Fidelity Investments saying that workers in certain divisions, including information technology, were being given notice.
Plenty of other financial institutions are also making cuts - look no further than Bank of America, Citigroup, UBS, Lehman Brothers and Morgan Stanley - although most are expected to lop staff in structured credit first.
Paul Thoma, director of recruitment firm Garthorne Associates, says this doesn't mean tech staff will necessarily avoid the hatchet. "Senior managers are at present finalising their budgets and headcounts for 2008, with the anticipation that numbers will be down from 2007. Redundancies are now occurring across the City and senior IT managers are accepting their proportion of losses whilst strategically spreading them across all business lines. This enables them to remove under-achievers at all levels in all areas, as opposed to purely making cuts in credit departments."
He adds, "Recent graduates have expressed concern about early redundancy, due to their lack of skills and experience. However, senior managers are predicting more losses amongst established members of staff who have been slow to progress, lack the enthusiasm and attitude of graduates, and also cost more."
Thoma added that the market is not seeing the same volume of losses as 2001/2002, which was caused by a loss of confidence in the financial markets post 9-11.
Another industry watcher, Cubillas Ding, a senior analyst at Celent, feels that technology positions are safe, at least for the time being. "Some scalps are likely to go as a result of the current crisis but this is not likely to be across all business units; for now, only the units directly involved are announcing redundancies," says Ding.
