Here's Affinity Resource Group Partner Peter Wagner's 2015 Q2 report on current trends in the front-office financial services IT job market:
The market had tailed off in the first quarter as firms were absorbing a poor 4th quarter of 2014. Now we know that the first quarter of 2015 was quite strong. Profits from trading were up considerably in the 1st quarter. While the 1st quarter is generally strong, the results were especially impressive in light of the fact that most banks have reduced their risk-taking activity. A senior executive at Barclays told me that the Rates desk is up 250% year over year and these results alone are bolstering the firm’s outlook.
Increased contract rates!
Finally the market seems to have responded to the supply/demand imbalance for talent. For the past couple of years, rates didn’t really change despite a strong demand for talented developers and SME’s in critical areas. Steady pressure on costs kept rates steady. However, in the past couple of months, I have seen a regular supply of contract positions at posted rates that are significantly higher than anything we saw last year. The uptick appears to be a combination of the desire of aggressive managers to onboard talent while the hiring window is open, coupled with a strong first quarter that has budget managers comfortable signing off on higher rates. If you feel you took a contract below the current market, now might be a good time to evaluate your options.
Where’s the money?
From this seat, we continue to see banks investing in Risk, Compliance, and strategic technology aimed at reducing overall costs. Studies like the McKinsey report quoted below have senior management very focused on management of IT initiatives and standardization:
McKinsey: “We found that certain categories of IT management capabilities show a strong correlation with lowering spending on day-to-day IT operations. The correlation was particularly strong for cost control, rigorous project prioritization, advanced sourcing practices, and relentless standardization of IT infrastructure and application architecture. Banks that manage these areas well spend, on average, 41 percent less on day-to-day IT operations than banks that have self-reported deficiencies in these fields (Exhibit 2).
GECC made big news in April announcing the divestiture of the majority of its GE Capital operations. While Jack Welch recognized the money that could be made by leveraging GE’s enormous balance sheet, Jeffrey Immelt has in turn realized that the cost of doing this business is too high in the current regulatory environment.
“The move announced Friday reflects the shifting landscape of the financial world, especially for the largest players. They face greater regulatory scrutiny and calls from analysts and investors to slim their operations or break up. Some are shifting their focus to areas like wealth management as traditional activities like trading prove less profitable. It is no surprise that G.E. decided to re-evaluate its role in this ecosystem.” NYTIMES
During my time working at investment banks, I was always amazed by the infrastructure that was required to support the trading operations. No matter how many associated groups/functions I was aware of, I never stopped learning about new downstream groups performing additional critical functions. It gave me a tangible impression of how much money a successful trading desk can generate. However, the news from GECC seems to underline the (obvious) fact that there’s a limit to what these businesses can support.
Deutsche Bank co-CEO’s step down
The news out of DB of their co-CEO’s stepping down is another manifestation of the pressures on investment bank profitability in the current market. Anshu Jain was the biggest proponent of continuing to invest in DB as an investment bank that could compete with the likes of Goldman Sachs and JP Morgan Chase, while all other European banks retreated. While DB is reducing its investment banking operations, it remains to be seen whether they join their European counterparts in a full-fledged retreat.
The list has gotten so long it’s hard to distill. If you are interesting in discussing the current market, please give me a call.
- Senior java developer, ED Level – Fixed Income Derivatives Trade Processing
- Senior C# developer, ED Level to build a brand new margin system for a major hedge fund
- Broadly skilled C# developer to lead the IT effort of a relative value prop trading desk at a mid-sized hedge fund. You will sit on the trading desk with the traders and quants and build whatever technology they need to conduct their business.
- Very skilled C++ developers – low-latency systems, real-time market data, etc.
- Many opportunities for strong C# developers with good experience in Microsoft stack for a variety of hedge fund roles
- Very strong demand for BA’s and PM’s in Risk and Compliance
o A rare ED Level role for IHC CCAR Program Manager
o Broad opportunities in Market Risk/Credit Risk/Operational Risk
o Multiple opportunities in IHC/FBO
o Both full-time and Contract hires – more full-time positions currently than we’ve seen in recent years
Don't hesitate to call if you are interested in discussing the current market.