Banks hire experts to oversee tech work close to home
Banks frustrated with the quality of development work at offshore locations are bringing these tech roles closer to home and hiring top level strategists at headquarters to oversee the work.
While offshoring continues - eleven large investment banks have more than 80,000 jobs in lower cost destinations - more banking executives are reconsidering the benefits of relocating large numbers of jobs to places such as India, said Martyn Hart, chairman of the National Outsourcing Association.
“Traditionally, salaries for technologists in India are 40% of that you would pay for an equivalent role in the UK or US, but it’s becoming less cost-effective,” he said. “Bank executives tell us that with management costs, rapid salary inflation in the country and the recoding required, costs even out with lower cost destinations in the UK and US.”
Moving IT work to more developed locations closer to Western headquarters, or nearshoring, isn’t a new phenomenon, but there’s a greater focus on increasing headcount in these places, Hart said. In the UK, Citigroup has been building its centre of excellence in Belfast, for example, J. P. Morgan now has some 4,000 people based in its Bournemouth operation and Morgan Stanley has been hiring technologists in its Glasgow business.
In the U.S., Raleigh, North Carolina is an important base for Credit Suisse, which employs 1,400 people there, Goldman Sachs houses a similar number of people in Salt Lake City and J.P. Morgan has 600 people in its North American Technology Center in Houston.
Another option is Eastern Europe. Banks’ operations in places like Russia, Poland and Hungary are usually smaller than those in India – typically 500-800 people – but the quality of talent is appealing, said Hart. And talent is cheap – a C++ developer in Poland is paid $15.4-30.8k, according to a salary survey from local recruiters Advisory Group TEST Human Resources. An equivalent role at an investment bank in London offers £45-70k ($69-108k), according to recruiters Hudson.
While any nearshoring or offshoring moves are obviously bad for job prospects in developed financial centres, there is an upside; banks are hiring change management professionals to oversee these programmes. The headcount required in Western locations to manage the relationship with offshore locations comprises, on average, 5% of the jobs being shifted to lower cost destinations, said Hart.
“There’s been a big uptick in change management roles around offshoring, largely on a contract basis,” said Charlotte Dixon, senior consultant in projects recruitment at Robert Walters in London. “Banks want people with experience of offshoring, nearshoring or outsourcing and most require knowledge transfer understanding to ease the transition to offshore centres.”
These roles typically pay £450-600 a day, she said, but a more lucrative route could be to work for a consultancy such as Deloitte or Accenture. Simon Langford, head of research at recruiters Concilium Finance said that banks are hiring in consultants to manage offshoring projects. Salaries range from £65-70k, he says.