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Reviews by UK financers’ of their IT systems following the global credit crunch will trigger demand for freelance tech staff to rise, in line with predictions in the US made to CUK . Institutions with hedge funds and proprietary trading desks will dismantle and rebuild computer models that help them determine when they buy and sell investments. Recruiters also expect funds hit by the turmoil to look again at the capability of their IT systems, to ensure they are better equipped in the future to assess and respond to risk. Back-office IT systems of the clearing houses, banks and exchanges which process trades may also need to be strengthened to handle sudden spikes in trading volumes. Issuing these verdicts yesterday, ReThink Recruitment said the result is likely to be a rise in demand for IT skills from a fund management industry keen to learn from its mistakes. In particular, the agency pointed out that many of the funds that invested in the mortgage-backed securities at the core of the crisis are IT-driven quant funds, which make trades using historical data. Computer-driven quant funds are thought to have sustained some of the heaviest losses during the recent sub-prime crisis: Goldman Sachs alone pumped £1 billion into its own quant fund during a single week. “Some of the funds which sustained the heaviest losses are computer-driven, which means their trading decisions are essentially pre-programmed,” said John Butterfield, the agency's managing director. “These funds will need to look at refining and testing their computer models so that they are better equipped to predict and respond to market volatility.” An industry-wide efficiency drive could also boost demand for IT skills, as “delays of a few seconds in processing trades can have significant financial costs for investors”, the agency said. It is estimated that about 60% of trades are now computer-controlled on the London Stock Exchange, compared with 40% last year, explaining why IT expertise remains vital. “IT has become much more important in financial markets in the last few years alone as electronic trading platforms have proliferated,” Mr Butterfield said. “The rewards for IT people have increased along with the importance of their role. Top contractors can now take home over £1,000 a day.” Paul Taylor, vice president at recruitment firm Hudson, said the latest industry estimates suggest that financial services absorb just over a quarter of global IT spending. “We all know how big a part IT plays in the finance industry,” Mr Taylor told CUK from Hudson’s New York office. “The financial services industry is a huge adopter of where the IT department can help regulate; speed up and make what they do more efficient, so I think there will be a wholesale review of where IT can help.” But IT was not the main culprit of the global credit squeeze: the brains behind IT and the people who set each institution’s rules for lending were responsible, Mr Taylor said. He added: “If you take a basic point-scoring system that dictates when someone can get credit, then that’s not the IT department’s fault, that’s the fault of business analysts following the business’s rules.” Analyst house Gartner estimates that financial services accounted for a quarter of worldwide server revenue in 2006, and 28% in the Europe, Middle East and Africa regions. Global IT spending on products and services by financers grew 8 per cent to $317.7billion in 2007, according to Celent, a financial IT advisor, and will rise to $351.2bn next year, at a predicted yearly growth rate of 5.1 per cent. Closer to home, ReThink believes the anticipated rise in demand for top notch IT skills won’t tempt London-based financers to cut costs by hiring overseas. “The last downturn in the City was the catalyst to outsource a lot of IT work to India,” the agency said. “There really isn’t that much IT fat for banks and funds to lose this time around.” Nov 1, 2007 Email this article Printer friendly page Previous Page
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