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Q2 Market Intel Newsletter

 

It’s now over a year since more than 17 million voters felt the United Kingdom should leave the European Union. Post last years referendum the appetite for growth across financial services seemed to slow, with many firms creating contingency plans that could see thousands of jobs leaving the city. Despite uncertainty and a snap general election, the first 6 months of 2017 has seen a significant volume of hiring. At Radley James we feel it’s a lucrative time to be a technologist with regulatory experience, as demand from Investment Banks lagging behind on their MiFID projects is driving up contract rates across the city. On the buy side, while global macro funds have struggled in the last few months, systematic trading firms continue to skim the top 1% of talent into their core technology teams; and amongst all of the in-movement between the old guard, competition from start-ups is unrelenting and the lure of cutting-edge technology and freedom from bureaucracy is difficult to ignore.

Whilst the capital has its pull, data from the industry lobby group TheCityUK suggests two-thirds of the 2.2 million people employed in financial services jobs in the UK now work outside London. HSBC seek to entice staff and new employees to their new UK HQ in Birmingham, offering a cash bonus between £750 and £2,500 for referrals from colleagues. BAML currently have ~1000 employees in finance, support and regulatory compliance in Chester, with plans to double this by 2020. Post their move from Canary Wharf they also seek to strengthen their presence in Camberley and Bromley.

 

 

IR35 CHANGES

Has this affected the contract employment market?

As the financial year came to an end the government looked to restrict individuals that essentially work as permanent employees, but take advantage of their status to avoid NI and PAYE contributions. Their IR35 tax reforms announced by HMRC saw confusion, anger and uncertainty for many public sector contractors. Many were deemed to be assessed as “Inside IR35” and as such, we saw an influx of IT talent actively looking for a new challenge in the private sector, most available almost immediately. Following the initial scramble to re-assess contractors, draft new contracts and communicate the repercussions across departments things seem to have calmed. Although the process has been chaotic, the Treasury estimated in it’s budget that the move will see an increase in revenue of £185m for the year ending April 2018. At Radley James we invest a significant amount of time and care to ensure all contracts are IR35 compliant and are happy to assist with concerns of that nature, please get in touch with our team should you have any questions.

 

 

CURRENT HIRING PROJECTION

 

 

Demand for technical talent shows no sign of slowing, as key regulatory projects continue to be approved all across the city. With the January 2018 deadline fast approaching, MiFID II expertise is becoming the most valuable skill in the market and headcount in this area continues to be signed off. However, due to successful hiring earlier in the year, a number of London based Investments are reaching capacity and desk space is quickly becoming scarce. We have seen roles starting to be put ‘on-hold’, and a handful of senior individuals have suggested that the reluctance to invest in additional office space stems from uncertainty around a hard Brexit. Some banks such as Deutsche Bank, JP Morgan and Goldman Sachs are focusing more expanding their FTE workforce, whereas Morgan Stanley, Bank of America and UBS are leaning more towards contractors at the moment.

Buy-side firms continue to keep open positions for the best developers in the market, but a sluggish start to the year in the global macro space means that most of the demand has come from systematic firms. While there are a few funds hiring aggressively due to new projects, the majority are, as ever, only speculatively keeping an eye out for talent.

We are seeing significant growth from smaller tech firms, particularly those who have secured Series B funding already. Flexibility in both role and interview process plays a huge part in how start-ups are competing with established companies. Many are offering the chance to experiment with interesting technologies as well as a greater opportunity to express their creativity. Furthermore, interview processes tailored to each individual candidate, with format both more personalized and personal, helps these companies to engage with candidates on a higher level straight from the start.

 

We are seeing active hiring across the majority of Investment Banks, funds and tech firms on both the permanent and contract sides. Regulatory projects around MiFID II has created a large contractor base and we expect that this won’t fall until at least Q1 2018. Permanent hiring increased from Q1 levels across the board. Deutsche Bank continues to replace their vendor developers with FTEs and are one of the most active firms in the permanent market at the moment. Most of the other Investment Banks also continue to grow, with electronic trading and other front office teams making up the bulk of demand for FTEs.

 

London remains a very attractive location for technologists. The opportunities and vibrant technology culture that the UK capital offers continues to draw talent from around the world; and especially from those already in the EU, where Visa sponsorship isn’t an issue. That said, we have seen a small minority reluctant to interview as a direct result of Brexit. We expect this hurdle to become less of an issue as Theresa May publishes blueprint on migrants’ rights and ‘settled status’. Relocation packages for technologists remain generous with firms offering financial and logistical support for those who have shown their ability at interview.

 

Outside of London, Southampton and Manchester remain hotspots for technical talent in the U.K. Within Europe, Dublin, Amsterdam, Paris, Frankfurt and Luxembourg are key locations. Many companies are also established in lower-cost countries such as Poland, Bulgaria, Hungary and Romania.

Morgan Stanley compete for talent in their ‘Non-Metro’ locations such as Danube, Budapest – providing support across a variety of services including Information Technology, Financial Control, Operations, Credit Risk and Documentation.

Denmark remains a lodestone for technology in Northern Europe with Danske Bank and their Nordic fellows hiring across cities such as Copenhagen, Aalborg and Aarhus.

 

TECH SPACE Vs FINANCIAL SERVICES

As ever, the financial firms face fierce competition from other industries for the best technologists on the market. The prestige of working for a company such as Google or Facebook appeals to many candidates, in particular those of the younger generation; and the culture often makes for a welcome change to those leaving finance. On the flip side – the stability, compensation, and progression that finance offers means that there is never a shortage of technologists looking to break into the industry. Barriers to entry into (and exit from) finance remain, with many roles in Investment Banking favouring those with prior business knowledge, and many tech companies not liking the mind-set that technologists in finance develop.

Many Investment Banks continue to create and introduce start ups, innovation hubs and acceleration labs within their organisations. These projects, focusing on areas such as data science, HPC and emerging technologies such as Blockchain, are playing a big part in driving technology innovation in financial services forwards. While disruption often comes from those willing to risk months and years of their lives, these new initiatives can offer those working on the cutting edge the stability of a big bank.

 

 

HOT TECHNOLOGIES

C++, Java, C#.NET and JavaScript

Scala

Python

KDB

FPGA

Big Data

Machine Learning

The Investment Banks continue to recruit a significant volume of Scala Developers with a focus on delivering a consolidated front to back financial system, focused on Valuation and Risk Technology. G-Research, the growing firm with a leading platform for developing quantitative research and systematic investment ideas push on with their aggressive growth plans for 2017. Multiple teams are hiring across a range of technologies, including C++, F# and predominantly C#.

As expected many firms seek to capitalise on the perceived advantages of artificial intelligence, machine learning and data science – therefore there is an increase in demand for individuals with knowledge of Python programming – Pandas, Numpy, SKLearn, etc. and AI Applications and tools like TensorFlow, Theano, Neuroslutions etc. Applicants also with Masters Degrees or PHD’s in artificial intelligence, deep learning, machine learning or computer science are still in high demand for these roles.  Data scientists, data analysts and data engineers are still in consistent demand across all facets of the IT industry.

After a slowdown towards the end of 2016, Deutsche Bank has resumed hiring C++/Python developers to support their front office risk and pricing platform buildout. They have targeted some of the more business-savvy technologists by offering ‘strats’ packages with more quantitative responsibilities and higher compensation.

 

CURRENT SALARY TRENDS (U.K)

Few Investment Banks are paying over £110,000 basic at the moment as most hiring is topping out at VP. Hedge funds are, as always, reluctant to offer high basics, preferring to rely on their high bonus packages.

Established technology firms such as Google, Facebook etc. have the extra option of being able to offer shares on top of this; and they remain competitive with financial institutions with regards to pay.

 

SENIOR TECH MOVERS…

 

DIVERSITY & INCLUSION

The government considers a tougher line with BAME

UK companies are warned by the Government to improve black, Asian and minority ethnic (BAME) diversity voluntarily or potentially face the prospect of mandatory diversity requirements.

A letter sent to FTSE 350 companies, stated Margot James, business minister has encouraged employers to act on recommendations suggested in the McGregor-Smith review of career opportunities for BAME groups. Among the 28 outlined recommendations in this report employers were advised to publish a report of their work force by pay and Ethnic origin and set targets. It has found that the employment rates of employees with a BAME background were 12 percent  lower than their white colleagues,  while just six percent of those working in executive level roles.  If companies do not take a pro active approach and voluntarily action the recommendation, the government will be forced to consider making the recommendations a legal requirement.

The Return to work programme across both Bank of America and Morgan Stanley has seen an opportunity for individuals that have been out of work for over 2 years to re-engage via a 12-week paid internship. Upon completion of the program, participants may receive an offer of employment.