Beware - the super-hubs are coming
In the future, financial sector workers will have to seriously consider their location. This doesn’t just mean a toss-up between London and New York or Hong Kong and Singapore, but whether to gravitate towards a so-called ‘super-hub’ city for finance that will attract the best and brightest.
At least this is the theory of a new report by the ACCA, which suggests that the cost-advantages of offshoring or outsourcing finance roles to cheaper locations are being increasingly negated by diminishing labour arbitrage. Rather than being led by cost-savings, financial firms will instead base functions to match the large skills base in a select band of ‘super-hubs’, which will suck in talent from elsewhere in the world.
“This is not just about moving back office operations to cheaper locations, but shifting higher-value functions to these cities where there’s a high degree of talent, which in turn could attract people from areas of high unemployment,” said Jamie Lyon, head of corporate sector at the ACCA and one of the authors of the report. “We’re already seeing this with professionals from Spain moving to countries where the jobs are.”
Where are these super-hubs? The report didn’t go into specifics, but this trend doesn’t necessarily mean a land grab of jobs away from Western locations. Shanghai, Manila and Bangalore were cited as examples, as were Eastern European locations like Krakow, Warsaw and Budapest, but it’s just as likely that places such as Dublin, Belfast, Glasgow, Salt Lake City or Delaware could further cement their reputations for back office and technology expertise.
“The scale and prevalence of English speaking graduates means that places like India and China are likely to remain popular locations for financial services firms in the future,” said Nick Mayes, head of research at Pierre Audoin Consultants. “However, financial services firms are increasingly moving functions closer to home – areas of the US and UK where there’s a large number of highly skilled graduates and a relative dearth of high value jobs in certain parts of the country.”
Glasgow is already home to big investment banks like Barclays, Morgan Stanley, BNP Paribas and J.P. Morgan carrying out both shared services and technology functions in the city. Goldman Sachs, meanwhile, employs 1,400 people in Salt Lake City.
Choosing the right location could be integral in the future, argues Lyons, as: “Young finance professionals in these aspiring ‘hubs’ might find fewer opportunities as the largest businesses concentrate in a few key cities for most of their finance operations.”
Future leaders
Perhaps more scarily, the ACCA report points to 24-year-old managers in locations like India and Malaysia taking on job responsibilities that it “took baby boomers in the West 20 years or more to learn” and replacing managers twice their age.
However, to suggest that you’re about to be ousted by a young super-manager from a distant super-hub may be an exaggeration. Mayes suggests that “skilled UK graduates will still be in demand”, while one senior manager working for an investment bank in Glasgow tells us that there recruitment policy is based on developing the managers of the future.
“Graduates are taken on for their potential, not their current skill-set and we have one eye on the leaders of the future, who can be fast-tracked,” he said anonymously because he’s not authorised to speak to the media. “What’s more, while we used to recruit from the local talent pool, we’re receiving more and more applications from people globally.”
Your boss will come from a more diverse range of countries, added Lyon: “What we’re saying is that locations that have traditionally been known for transactional activities will develop the leaders of the future.”
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