Asset management techies are set to work for a vendor
A few months ago we highlighted the fact that European asset managers were likely to be bolstering their technology ranks this year. This may have been premature.
In fact, according to a new report by Celent, fund managers in Europe set to begin outsourcing front office technology functions - like trade entry, routing and trade order management - over the next two years to external IT vendors. The logic being this will free up more time and money to focus on investment performance.
"Firms have come to realize that there is no reason that the front office should be untouched by outsourcing," wrote Celent analysts Anshuman Jaswal and Muraldidhar Dasar.
The good news, however, is that this could provide something of a boon for the technology vendors that service the asset management industry.
There are already some signs that this is filtering through to recruitment. Sophis and Sungard, two of the firms that Celent has earmarked to benefit from the outsourcing trend, are hiring consultants, development staff and project managers in London.
But it would also be wrong to write off employment prospects for technologists in the asset managers themselves entirely.
Firms are currently recruiting for project managers and business analysts, suggesting that a number of major projects are getting the go-ahead, says Nick Finlay, head of investment management at Hays Finance Technology.
"Asset managers are hiring technologists for the development of front office multi-asset class trading systems, rolling out system implementation upgrades and kick-starting a lot of compliance projects," he says. "There's also a lot of C# development work for pricing engines across FX, derivatives and equities."
If this move towards outsourcing does indeed pick up, most asset management IT professionals would switch to a technology vendor out of necessity, rather than choice, says Finlay.
"While the salaries are broadly similar at fund managers and technology vendors, bonus potential is only around 10%," he says. "That's why the flow of talent is usually only one way - from vendor to investment manager."
