Will more fintech jobs be on a passage to Prague?

Deutsche Börse is shifting some 270 jobs, including IT roles, from Frankfurt and Luxembourg to Prague as part of a cost-cutting programme that aims to eventually save €100m a year. Can we therefore expect more financial services firms to shift tech roles to Eastern Europe this year?

The cost-cutting programme will affect 370 jobs - 100 will be axed, while the remainder will be relocated to Prague. Some IT roles will also be included in the shift to the Czech Republic, where Deutsche Börse currently employs around 250 staff, as it looks to bring such functions in-house.

Obviously, financial services firms performing back office functions in Eastern European locations is nothing new - Citigroup and UBS run service centres in Poland, for example.

The question is whether outsourcing functions out to low-cost, yet comparatively close, destinations is likely to accelerate in 2010.

Nigel Roxburgh, director of outsourcing consultancy SourceGene and former research director at the National Outsourcing Association, believes so.

"Financial services firms have typically been fairly conservative in their outsourcing functions to Eastern European locations," he says. "However, places such as Prague are natural hubs for services such as IT for any multinational company. And, while the salary differential exists, companies will continue to exploit this."

A highly-skilled workforce, smaller timezone differences, European language skills and western culture have all contributed to the appeal of Eastern Europe as an offshore destination.

"India is great in terms of technical expertise, but it's very process orientated and workers tend to need a lot of guidance," says Rajeena Brar, consultant at IT think-tank Pierre Audoin Consultants. "Eastern Europeans tend to be more resourceful and innovative, which has meant the talent there is very attractive to sectors such as banking for things like research and development - particularly when it's so cost-effective."