Bullish sentiment around tech budgets may not translate into hiring

The fact that financial institutions are tipped to up their tech spend next year doesn't necessarily mean there will be more IT jobs within investment banks.

Now that you're considering dusting off the Christmas bunting, it's clearly the time of year to start speculating about IT budgets for 2011. Step forward tech consultancy Ovum, which has issued a bullish projection that spending on IT within financial markets will grow by 4.5% next year.

By all accounts 2010 has been something of a stellar year for financial technology recruitment, with most investment banks taking on techies in their hundreds in the first half of the year. Are we therefore to assume that even more vociferous hiring is on the cards next year? Perhaps not.

"The message we're getting is that an increase in IT budgets is not necessarily going to be replicated in headcount," says Mark Warburton, partner and sales director at IT in finance recruiters 752 Solutions. "Banks have hired a lot of people this year, and only truly seeing the cost of this now, which is currently affected plans for 2011."

That's not to say that hiring is expected to be particularly muted. Warburton says that many banks are expecting to balance out the ratio of contract to permanent roles, with many contractors converted to permies. Similarly, banks are identifying "platinum projects", which will require additional headcount.

Daniel Mayo, technology analyst at Ovum, believes that banks will be building bespoke systems for the front office (which could spur recruitment) and largely automating the back office, which is more likely to benefit technology vendors.

Regulation, as we've pointed out before, will also be an area of focus.

"They will also be investing heavily in systems that help them comply with the barrage of new regulations brought in since the financial crisis," adds Mayo.

Within the senior ranks, there is, however, talk of "ambitious" new projects next year and a need to bolster headcount to support them, suggests Paul Bennie, director of IT in finance headhunters Bennie MacLean.

"The guidance we're getting from senior technologists within investment banks is one of bullish sentiment around new projects, which will translate into hiring," he says. "As yet, though, we still haven't received any defined objectives as budgets and targets are still being signed off."