A survey of 140 IT leaders at financial services companies indicate companies plan to spend more money on technologies that can help them keep up with their competition. The survey was conducted by Wall Street & Technology and its sister publications Bank Systems & Technology and Insurance & Technology.
Some 42 percent of sell-side firms said they expect to increase their IT budgets by 11 to 30 percent next year. Thirty five percent of buy-side firms had plans for the same range of spending increases. Another 35 percent of buy-side firms planned to boost IT spending between 1 and 10 percent.
In addition to rising infrastructure costs - for things like electricity and data-center cooling - a big chunk of the motivation to spend lies in the cost of IT talent. "A widespread IT labor shortage is driving IT salaries up," notes Wall Street & Tech.
"The competition for skilled labor in the technology industry has rebounded from the dot-com bubble," Steve Rapp, chief technology officer of Nicholas-Applegate Capital Management in San Diego, told the magazine. "We're finding the (pay) rates are back up for both consultant labor and for full-time employees. We have to remain competitive, so we're trying to be on top of that."
Still, the need to stay on top of technology won't necessarily translate into prosperity - or even job security - for the Street's IT staffs. Eric Moskowitz, head of the compensation consulting practice at the search and consulting firm Options Group, recently told us he believes IT bonuses will fall by some 5 percent this year, and more in 2008. And, he notes, technology groups usually feel a delayed impact when business suffers: He sees IT headcounts dropping between 5 to 10 percent in 2008.