01 September 2005 Features

 

Slow but steady

There are some signs for optimism for IT professionals among the headlines of mass layoffs from banks and continuing offshoring of operations. Banking Technology sifts through the numbers

Several recent surveys point to a slow but steady growth in employments rates, while a parallel report indicates that finance sector companies have a problem with retention and are looking for ever more ingenious ways of differentiating their employment.

“Hiring has remained at solid levels in the City since the beginning of 2005. While we have not witnessed the return to levels seen during the peak years of 1998 to early 2001, there has been a steady level of demand from employers for IT staff which has climbed since the financial market recovery in late 2003/early 2004,” says Allison Tibbatts, lead consultant at recruitment specialist Eurobase People.

Tibbatts’ views are backed up by the latest CWJobs/SSL quarterly IT skills index, which shows that permanent vacancies increased by 2.5 per cent following a 2.6 per cent decrease during the first quarter of 2005. The number of positions advertised for contract staff increased by 2.5 per cent, a small rise in comparison to the 11 per cent increase posted between January and April 2005.

According to Tibbatts, demand has been precipitated by the recovery and growth of emerging markets in Eastern Europe and Asia - specifically China. Other industry-related trends have been Sarbanes-Oxley and Basle II, both of which have formed demand for specialists in this area. “Overall there seems to have been a more settled feel to the City markets brought about by the US economic recovery and a consistent base rate set by the Bank of England,” she says. “Employers are seeing strong profits - Lehman Brothers, RBOS and Barclays being the obvious names here - and this is encouraging the sign-off of projects set to take business further.”

Other research indicates that there are problems for employers as job mobility returns, particularly at the management level, and organisations in the banking sector are struggling to hold on to their employees, despite the frequency and value of bonus payments. The 2005 National Management Salary Survey also shows that benefits packages have improved as companies battle to attract staff.

The survey, by the Chartered Management Institute and Remuneration Economics, shows that 76.4 per cent of executives in the banking sector received a bonus in the year to January 2005 — above the national average. But in spite of the high number of people given bonus payments, 45.4 per cent of companies are reporting retention problems — the worst reported figure for 15 years.

Asked why their employees leave, nearly 62 per cent blamed competition from other organisations and 45.4 per cent admitted they offered little in the way of career progression or training. Salaries (43.2 per cent) and job security (40.9 per cent) were also cited as reasons for job changes.

The findings reveal that the average total earnings for managers in the banking sector are £47,741, putting the sector fifth in the UK ‘earnings league table’. It is interesting to note that managers’ salaries account for a large proportion of guaranteed take home pay because at £5,518 (for managers in banking), their bonus is worth 11.6 per cent of total income. Directors, in contrast, rely on bonuses for 38.6 per cent of total earnings. This differentiation is important as company and personal performance affect bonuses for 65.7 per cent of directors, compared to 56.2 per cent of managers.

The survey, of 20,989 individuals, also shows changes to the nature of benefits packages. Thirty years ago, the norm was four weeks holiday per year, with 61 per cent taking 20 days. That figure is now 78 per cent, with executives taking between 21 and 25 days annual leave. Signing on bonuses have almost doubled over the last year (to 14.1 per cent) and many businesses (51.4 per cent) offer referral payments to staff recommending potential recruits.

There is clear evidence in this year’s survey that organisations are finding it difficult to attract staff. 43.4 per cent said they had experienced recruitment difficulties, up from 30.9 per cent last year. Of those companies facing recruitment problems, more than two-thirds (69 per cent) put them down to a lack of candidates with specialised skills, especially those in IT management, engineers and salespeople.

Mary Chapman, chief executive of the Chartered Management Institute, says: “The reported shortage of managers and staff with relevant skills is a concern because competitive advantage can be threatened if employees lack the ability to carry out their roles. Worse still, many organisations admit that they fail to provide adequate development initiatives, even though it is a major reason for leaving. If employers are serious about reversing the current recruitment and retention trend, they must address this issue and develop incentives that suit employees’ needs.”

The latest CWJobs/SSL quarterly IT skills index shows that permanent vacancies increased by 2.5 per cent following a 2.6 per cent decrease during the first quarter of 2005. Meanwhile, the number of positions advertised for contract staff increased by 2.5 per cent, a small rise in comparison to the 11 per cent increase posted between January and April 2005.

Employers view SQL, MS Office, C and Java as the most desirable skills for permanent staff in the sector while VMS, Loadrunner, DCOM and HP-UX proved to be the least popular. Meanwhile MS Office, SQL, Oracle and Unix are the most highly sought after skills from contractors with Python, Assembler, OOA and CAD the least desirable.

The largest salary increases for permanent staff between Q2 2004 and Q2 2005 were seen for the roles of MIS/IT Director, which saw a year on year increase of 28.1 per cent, followed by Office Systems/Helpdesk Manager (+24.1 per cent), Software Engineer (+23.8 per cent) and PC Help Desk Support (+20.2 per cent).

Contractors experience the highest salaries working as Management/ Systems Consultants, which saw a year on year rise up 130.4 per cent, followed by Project Leader/Senior Systems Analysts (+111.1 per cent), PC Support (+63.6 per cent) and Projects Manager (+24.4 per cent).

Commenting on the statistics, Richard Nott, Sales Director at CW Jobs said: “Although many financial institutions have been moving the IT function offshore, the increase in permanent posts is an encouraging sign for the future. The IT jobs market is still buoyant and the financial sector remains one of the highest volume employers of staff, so those looking to change their job should find some comfort from the level of vacancies.”

Tibbatts says the Microsoft .Net architecture “would appear to have come of age” and the tools embraced by it — C#/VB.Net/ASP.Net/SQL Server/ MS Reporting Services are being sought across town. “Candidates with a strong object-oriented development background and who can face-off to the business with these skills are probably able to select their next move from several offers on the table,” she says.

“E-enablement is definitely the name of the game and banks, insurers and other financial market players are seeking a closer, more real-time relationship with their brokers and customers,” she says. “Beyond a web-based shop-front, companies are employing IT specialists who can maximise profits by making sales of every product faster and easier for the customer. XML-based technology is allowing this, and technologists who are able to design, develop and deliver fully 3-tier distributed systems are eagerly sought. Added to this, the integration of all internal and external and third party applications into a single service oriented architecture is a big theme. Technologists who are able to design and deliver enterprise-wide architectures within a distributed environment are in high demand too.”

But this is not the beginning of a big upturn, say all three. “Currently, there is no reason to suggest that the hiring activity will either fall off or increase dramatically in 2006,” says Tibbatts. “Activity should remain steady with employers still seeking to balance their contract vs. permanent staffing levels.”