Dan Gallagher’s Blog on IT Careers in Investment Banking

One thing for sure is that the market for permanent staff is looking extremely positive. Long gone are the days when IT staff had to sit contently and work all the hours under the sun to be rewarded with a meagre bonus at the end of the year. These days if you decide to change job you can expect to increase your compensation by at least 10% to 15%.

At the moment banks are struggling to recruit experienced IT professionals with financial domain experience. As a result basic salaries have increased since September 2005. For example, the average minimum wage for IT staff in the city last year was £53,970, one year on it has increased to £57,202 (http://www.itjobswatch.co.uk/jobs/uk/investment%20banking.do). This is an increase of 5.6% and should the market continue in the same vain we expect salaries to increase in Q1/Q2 of next year.

Having placed candidates from outside the banking industry this year on salaries that range from £50,000 to £60,000 this figure of £57,202 seems to be accurate. For those who have worked in the industry for more than 3 years your value on the market will be £65,000 and upwards. Obviously, this is dependent on the technologies you are working with and the business area you sit in.

Those with front office business knowledge coupled with the latest technical skills can expect a premium for their services. A project manager with 5 years experience in delivering front office trading applications can expect a basic salary circa £85,000-£105,000 with bonus expectations of anywhere between 40%-75%. These premiums can also be seen in the development arena, specifically with C#, Java, J2EE, .Net and C++. Experienced business analysts and programme managers should also see these premiums.

While these salaries are excellent I commonly hear that developers within banks are not being paid these rates. This is a contentious issue as you may have been originally employed back in 2003 when recruitment was at a low point. If your basic salary was £45,000 back in 2003 it is more than likely that you will not have seen a huge increase in your salary year on year. Most people receive an additional £5,000 for each year served. Now, take into account that people with no investment banking experience are getting an average salary of £57,202 and compare it with those who have 3 years plus. Is it any wonder that banks are struggling to hold onto staff with this amount of experience?

I believe that it is this disparency which has driven so many into the contract market. If you are working in a major financial institution you will find it challenging to increase your basic salary toit’s true market value. This is because it is quite difficult for HR to increase an individuals salary by anything more than 10% (except in mitigating circumstances). If you are to realise your true worth then the best option for you will be to look for a new position.

As banks are now coming to realise that they need to renumerate staff at their market value we are finding permanent compensation packages to be just as attractive as contracting rates.

Over the past number of years I’ve recruited for both contract and permanent positions. I’m frequently asked by candidates for my thoughts on each particular position. Like everything, both have pros and cons, from contractors enjoying the independence it gives them to permanent staff who enjoy the stability it affords them.

Over the last 36 months the demand for IT staff with investment banking experience has led to the resurgence of the contract market. Not since the dotcom era have we witnessed such growth and this should continue for the foreseeable future. While the strength of the economy has certainly helped create this buoyant market one event back in the autumn of 2003 sticks out in my mind.

Let’s go back to 2003 for a moment when the market was poor. Contract rates for senior developers with investment banking experience were averaging out at about £350-£400 per day. Candidates who I considered to be quite good found it tough to pick up a contract as the competition was imense. It wasn’t until Barclays Capital started to aggressively recruit towards the back end of 2003 that the contract market started to pick up.

All of sudden we had a bank looking to hire in the region of 3,000 people globally, of which 1,200 were added in London in 2004. This helped the sluggish recovery of the contract market to go from paying £350 per day to £450 per day. It seemed that Barclays determination to hire as many technologists as possible in the shortest amount of time kick started the rest of the industry to spending money on IT projects. It wasn’t long before banks were competing against each other which helped drive rates up even further.

I’ve placed developers who have strong technical skills (Java, C++, c#) and banking experience (Fixed Income, Credit Derivatives, FX, Equities) at £700 per day at the top end with rates of £600 per day not uncommon. So where next for the contract market? Well next year is looking quite good with hiring managers predicting an increase in IT hiring over the next 12 months.

But remember, this sector of the investment banking industry can be something of a double edged sword. With financial organisations looking to outsource projects it may only be a matter of time before this buoyant cycle comes to a halt.

I’ve had my say, now have yours.

So we all know that Credit Derivatives, from vanilla to exotic have proven to be a very successful for various financial institutions. One American investment bank in particular seems to be leading the way in this area with huge growth seen over the past 2 years. And with the current active derivatives market producing an array of new products I’m sure they’ll be looking to take on candidates with experience of products such as CDO’s, CDS’s and other structured asset classes.

What makes the world of Credit Derviatives so interesting to work in? Is it a result of the complex financial instrutments that you deal with on a day to day basis, or is it the need for the latest technology to be used in order to enable the banks to build new products?

One thing is for sure, it’s certainly one of the best paying sectors within the investment banking industry and if you are a project manager, business analyst or developer you should be in line for another good bonus.

Well, it’s about time the blogsphere heard about the skill sets that I’m always on the look out for. As the market is candidate driven at the moment it’s more than likely that developers with a number of years experience of the investment banking industry will not be actively looking to move. And those who are on the market are likely to look at numerous job boards to see what positions are open.

The feedback from candidates I have dealt with in the past always comment about how they get inundated with phone calls from agencies once they submit their CV. For every live job at a bank there will be in the region of 15-20 adverts posted on www.jobserve.com or www.cwjobs.com. This happens as each bank has 5-6 agencies working for them which results in each agency posting the same job a number of times.

I’m guessing that candidates would like the job hunting process to be as painless as possible. With this in mind I’m going to update my blog with a brief overview of skills and business areas that I feel are in high demand. If any of these descriptions catch your interest than feel free to leave a comment and if it happens to be a position that suits your skill set then leave me your contact details.

The Preferred Supplier List is the mecca for all recruitment companies. This is what drives the business forward and getting on a PSL increases their bottom line. Once on a banks PSL they will adhere to a number SLA’s in order to stay there. These tend to be quite straight forward and ensure that the recruitment agencies service all live positions within the bank. If an agency doesn’t perform over a given period of time they’re likely to loose their place on the PSL.

In the financial services sector the HR function for contract staff (and some permanent) have been outsourced to companies such as Resource Solutions, Hayes and Hudson. All companies will have a PSL policy in place and only in rare occasions will they go outside this list.

Always keep a record of the positions your CV has been sent forward to. If an agency is on numerous PSLs then they may send your CV to all open positions that they deem relevant. This as you can imagine is not a good reflection on you as HR and hiring managers may feel that you are applying to every job without giving each position due consideration.

So, the latest figures out from the Yoh Index of Technology Wages makes good reading for anyone working in the financial markets. Overall, wages are up 1.7% when compared to the same period in 2005 and this trend is going to continue for the forseeable future. (http://www.yoh.com/yohindex/)

Simply put, if you’re a C#, Java or C++ developer working in the city you’re in the middle of a candidate driven market. If you feel that you’re under paid or under valued by your boss then now’s the time to see where you could move on to.

Chances are you’ll find more than one position that takes your interest.

Ever wondered where that feedback on your CV has got to? Have you experienced the wrath of a recruitment consultant if you take a position that doesn’t happen to be with their client? I’ve seen it all, from the cowboy recruiters to those who do a top job day in day out.

If you’re in the market for a new car you do your research right? You’ll more than likely ask around to get your friends and families thoughts on what’s a good car and where can you get the best service/deal. So why not do the same when you’re looking for a new job?

Do your research, find out who the good agencies are and which agents you should be dealing with. If you don’t, you’re leaving yourself open to recieving hundreds of calls a year of which the majority will be enquiring as to ”your current availability”.