Almost half of IT specialists in the finance industry feel their jobs are under threat amid concern that recent turbulence in global markets and a dent in consumer confidence will lead their employers to cut costs by outsourcing their IT departments.
Some 47 per cent of IT staff employed by financial services companies are worried about their job security, while 30 per cent fear employers are pushing for more outsourcing, according to the results of a survey carried out by eFinancialCareers.com, an online financial recruitment company for the UK and Ireland. Some 17 per cent of those polled believe their employers are considering cutbacks in IT spending.
"IT specialists in finance are right to be concerned as the jury is still out on whether the financial sector can build on the strong figures reported in the first half of the year," said Ian Brown, head of eFinancialCareers.com.
Morgan Stanley this week said second-quarter earnings more than doubled to $1.96 billion (€1.54 billion), led by higher-than-expected trading revenue, investment gains and fees from arranging stock sales. Goldman Sachs, Lehman Brothers and Bear Stearns reported record second-quarter earnings last week, bolstered by revenue gains in fixed-income and equity sales and trading. However, the firms said a prolonged drop in financial markets may hurt trading and slow mergers and securities sales.
"If the sector does need to pull in its horns in the second half, it is a safe bet that costs will be trimmed on the IT side before the trading floor," Mr Brown said. "Outsourcing IT provides the most viable way for businesses to reduce IT overheads on the balance sheet. In addition, banks, hedge funds and asset managers have increased their graduate intakes, which could also be putting pressure on more senior employees."
Foreign financial services companies, led by hedge fund administrators, ranked as one of the biggest new employers in Ireland in 2005. In the funds industry alone, the number of people employed rose by about 1,000 in 2005 to 7,000. More than 60 per cent of European hedge funds are now administered in Ireland.
The eFinancialCareers.com poll found that almost half of IT specialists in the finance sector did not receive an increase in their last bonus, while 16 per cent of them saw their bonus fall by half compared to this time last year. In addition, 43 per cent of specialists received a pay rise of less than 5 per cent, lagging the minimum 20 per cent increase at the last review.
As well as falling pay, job insecurity among IT specialists in finance is on the rise with concern about the impact a possible slowdown on the global economy will have on their employers.
Worries that rising interest rates in the US and Europe will stymie economic growth prompted many investors worldwide to abandon riskier assets in recent weeks, sending currencies tumbling and pushing major stock indices into the red for the year.
The European Central Bank (ECB) earlier this month turned up the heat under European borrowers when it raised interest rates by a quarter per cent and hinted further gradual increases may be on the cards for later this year.
At home, a report showed Irish consumer sentiment slumped in May and has worsened for three of the past four months over concern that higher living costs, especially energy costs, and rising interest rates will erode disposable income. Annual inflation accelerated to 3.8 per cent in April from 2.5 per cent in December, weighing on consumer confidence.
Of the 176 IT specialists who responded to eFinancialCareers.com's poll, 32.4 per cent were project managers, 26.1 per cent were developers, 23.3 per cent were business analysts and 12.5 per cent were system administrators.
The survey was conducted over a five-week period between May 1st and June 2nd.
