How the UK immigration cap is hitting bank's IT recruitment plans

With RBS and Lloyds both making redundancies and shifting jobs to India, getting non-EU technologists into the UK may not seem an issue right now. However, recruiters assure us that it is.

The quota for skilled workers from outside the European Economic Area introduced early last year is still a long way from being reached, but technology is recognized as a sector which relies on a larger proportion of foreign employees.

Software engineering is acknowledged as an area where there's a skills-shortage in the UK, and the immigration cap is becoming a bit of headache for financial services companies when it comes to hiring technologists.

"There is a stark skills gap in the market, particularly in areas of demand such as good quality software developers," says James Richmond, sales director at IT in finance recruiters Cititec. "Despite the rising figures of unemployment, there is a lack of home grown talent that is capable of fulfilling the requirements for experienced hires that investment banks have."

One of the consequences of the cap could be that investment banks accelerate the trend of offshoring more development work, suggests Nigel Roxburgh, managing director of outsourcing firm SourceGene.

"On the one hand, it's a positive for those with the requisite skills in the EU, because there's a smaller talent pool to fish from," he says. "However, it's more likely to mean a greater push towards more cost-effective offshore development centres in Eastern Europe or Asia."

Front office development work has long been carried out in places like the Ukraine or Belarus, and these teams could be built up over the next two years, he suggests.

This tactic is unlikely to score many points with the public amid rising unemployment in the UK, however. It's possible that banks may invest in their nearshore centres, particularly as the reduced salary arbitrage in traditional offshoring centres means they're now less cost-effective, says Martyn Hart, chairman of the National Outsourcing Association.

"Northern Ireland, Newcastle Leeds and Scotland are all becoming hotbeds of technology talent, and more banks are building their presence from an increasingly deep skills-base locally. This is a long-term investment, however, and requires ongoing training and development opportunities," he says.

For roles in the City, in the short term at least, banks are turning to consultancies for development positions, suggest Richmond.

"With hiring budgets being squeezed and the pressure to reduce headcounts, banks are turning to consultancies that own most of the candidate's visas," he says. "Consultants often come out of the project budget rather than resource budget, so some managers are using consultancies to get around recruitment freezes."