LSE outsourcing reversal unlikely to create UK tech jobs

London Stock Exchange (LSE) has brought its key trading technology back in-house through the purchase of Sri Lankan firm MillenniumIT, ending years of outsourcing by the firm. This gives the exchange new access to IT expertise, but is unlikely to lead to recruitment in the UK or even safeguard jobs here.

The LSE's $30m purchase of MillenniumIT means its existing trading platform TradeElect will eventually be consigned to the doldrums and also presents an opportunity to steal a march on tech-savvy competitors like Chi-X and Turquoise.

David Lester, director of information and technology, at the LSE says the MillenniumIT team will be "the Group's in-house software development team, gradually replacing our current suppliers and bringing intellectual property and know-how fully within the company."

But while the acquisition will undoubtedly improve LSE's trading platform, it's also an opportunity to continue to save money - it expects to cut 10m a year in IT development and operational costs from 2011-12.

The purchase of a captive facility such as this allows firms to buy in development expertise, but as these roles are usually based elsewhere, this is to some extent offshoring by another name, suggests Nigel Roxburgh, research director at the National Outsourcing Association.

"This doesn't translate in any way into the protection of UK jobs," he says. "However, there are outsourcing derived rules, which suggest you need an oversight team equating to somewhere between 5-10% of staff costs to remain onshore. These will be people to interface with the management team, and translate business requirements into technical needs for the captive facility."

LSE did not immediately return calls for comment on whether any roles would be either created or retained in the UK.