In a bid to shave off the equivalent of about $2.1 billion in costs, Credit Suisse is shifting more of its tech jobs away from New York and other financial centers to places like Raleigh, North Carolina where cost of living is lower and labor is less expensive.
Credit Suisse has been behind the curve when it comes to near-shoring and off-shoring, but it now appears to be accelerating the gravitation of roles away from places like New York, London, New York and Singapore.
In a presentation to journalists yesterday, the bank’s finance chief David Mathers said that more IT jobs would be shifted to lower cost destinations as part of the cost-cutting drive.
Mathers said Credit Suisse is hiring more techies Raleigh, North Carolina, Wraclow, Poland and Mumbai, India.
While Credit Suisse’s IT cost-cutting is worrying for technologists in New York and London, there are still reasons for optimism. For a start, the bank has actually increased its tech spend so far this year by around $40 million in the first nine months of 2011. It’s also still recruiting in these locations, even if the nature of the roles is becoming more specialist.
“When it comes to projects that can add real intellectual property to the organization, most banks are keen to keep the jobs closer to the financial centers in which they’ll be used,” says Paul Bennie, director of IT in finance headhunters Bennie MacLean. “If a technologist can combine business facing experience, with financial sector domain expertise then they’re still in demand in London and New York.”
This is reflected in the types of roles on offer at Credit Suisse. While generic development, IT support, messaging and web development roles are on offer in Raleigh, Wraclow and Pune, more specialist positions are required in London and New York. Project managers, business analysts, program managers and senior developers focused on rates, risk and commodities are all being recruited.
“Banks are typically reluctant to offshore front office development work, even to a captive center, because – for various reasons – lines of communication inevitably break down to the extent that code needs to be reworked,” says Martyn Hart, chairman of the National Outsourcing Association. “The typical salary savings in Eastern Europe are 40%, but this is reducing, which helps explain why more banks look to lower cost destinations closer to home like Scotland, Ireland or Raleigh.”
Another issue for banks is the need to keep up with the Jones’ when it comes to cutting edge IT. Move too many functions away from major financial centers and the high-performing tech talent that so many banks covet feels less inclined to stick around. Innovating, and being perceived as innovative, is imperative.
“We’re continually investing in smarter ways of doing things – whether that’s improving the latency of a trading system or improving our FX e-Commerce platforms – or we can fall behind the competition,” Phil Kent a managing director in Credit Suisse’s information technology division told us previously.