Vendors likely to recruit, as banks penny pinch on IT staff

IT headcount within the banking sector looks set to shrink over the next few years, as more firms take the cheaper option of utilising a third-party provider. This does mean, however, that jobs are coming within financial tech vendors.

Consultancy Celent is predicting that European banks will spend $18.5bn on IT staff this year, compared to $18.9bn in 2009. This will shrink by a further 3% in 2011 and another 6% in 2012, it says. There has to be a clear competitive advantage to justify using in-house staff.

"It's more expensive and less efficient to undertake development in-house rather than work with a third-party," says Axel Pierron, senior vice president at Celent. "It's clear that IT budgets are still in a very uncertain phase. In Europe, we're not expecting a big jump in spend on new projects, but if markets remain stable we'll see an increase. However, this will mostly benefit third-party providers rather than cause a huge recruitment spree in the industry."

But this would, of course, imply that technology vendors will need to bolster their teams as a result of increased business. However, major software group Misys - which saw sales in its banking software division shrink by 11% in the last six months of 2009 - says demand from financial services firms remains subdued.

There are still positives to be found though. Sungard Financial Systems is recruiting fairly significantly for its London operations, Trading Technologies has expanded its relationship with Mizuho Securities and is currently hiring, while SS&C Technologies' acquisition of Tradeware Group this month saw it add 60 staff in the UK and US. Sophis, which provides portfolio and risk management software, is also on the hunt for front office consultants within its London office.

All this is not to say that employment prospects for techies within the banks themselves are entirely bleak.

Celent is suggesting that banks will roll out technology projects around the convergence of cash management, trade finance, foreign exchange and liquidity management. Technology investment in flow products as well as risk management will also be priority areas this year.

"Throughout 2009 in the European wholesale banking industry, we've seen a recruitment around the integration if disparate technology platforms as a result of merger activity," adds Pierron. "We'd expect this to continue in 2010."