Bright news on job hunting prospects in the financial markets
(The million dollar question: is the job market heading for the worse or…)

After the fall of Bear Stearns (a victim of many impacted by the sub-prime/credit crisis), the financial industry is at an all time low in term of morale where uncertainties grow. In the rough first quarter— an estimated 40,000 people were laid off and financial services organizations are bracing for big cutbacks.  For instance, Citigroup (according to a reliable source and as one of the most recognizable US investment banks) announced that it would cut 20 percent of its operating costs after recording a $2 billion loss. Everybody’s tightening their belt on Wall Street.

However, business expansion means investing in IT today.  In previous times economic downturn would mean automatic IT budget slashing in financial institutions.  But today’s firms are looking last at IT due to its strategic importance focusing on differentiating itself from the Wall Street pack. 

Certain technologies such as risk management software and high-speed, low-latency network infrastructure for obtaining market data and making instantaneous trades, will get to have their IT budget because banks and trading firms have to continue to run-the-bank operations and carry on with the “must have” projects. “Technology is a lifeblood now,” explains Sean Kelley, CIO, group technology and operations at Deutsche Asset Management.  IT investments have a direct impact on profitability at banks.

Merrill Lynch reported a $1.97 billion net loss for the first quarter of this year, yet Alok Kapoor says, the firm’s head of global technology services, “Even in this cycle, volumes and volatility are at all-time highs, and capacity and performance are especially critical.  And while we are focused on running the plant, we can’t lose sight of making prudent investments that will ensure our competitive position.  Further, our businesses continue to demand higher productivity returns from their technology investments.”

Things are less appalling outside the United States, banks and brokers in Europe must upgrade their system to comply with the new regulation called the Markets in Financial Instruments Directive (MiFID), which went into effect last November.  This means that if U.S. financial services companies sharply hold back their IT spending, they could lope into a technology gap with European firms two years down the road.

“If financial services companies don’t make those long-term improvements this time around due to budget pressures, they may regret it later” says James Goodnight, CEO of analytics software vendor SAS.  Many firms are now investing on new system in making efficiencies from their front to back-end office which can save money on overall operating costs.  According to senior analyst, Tom Price, the markets are going to take a turn for the better and those firms that haven’t eviscerated their IT department will recover soonest and have a competitive advantage. 

Patient candidates should hang tight and wait for the job market to re-spawn and to catch the bandwagon. The job openings may not be as fierce as in 2007, but the growth in this area will certainly improve toward the year end. As it has happened on both the two previous downturns in 1994 and 2001, it is entirely normal to set back discretionary spending and clamp down on long term projects.  So embrace for the positive coming.

Sources:
http://www.wallstreetandtech.com
http://investopedia.com/articles/