In-house skills in high demand

Compliance and competition are driving huge IT changes in the financial sector. But new technology will not necessarily mean new technical IT jobs, at least not in-house. Peter Redshaw, research director at analyst firm Gartner, says most financial-sector IT will eventually be outsourced.

Sarbanes-Oxley, Basel II and other regulatory requirements on financial organisations to tighten up systems and processes mean they will move applications and data off old mainframes and consolidate disparate systems and databases.

‘When you break down the silos, outsourcers will be better positioned to do things such as testing, application maintenance, and quite possibly applications development – much of which is available very cheaply offshore,’ says Redshaw.

He says the adoption of service-oriented architectures will also make sourcing different IT components from multiple suppliers simpler and more cost-efficient. ‘A lot of the traditional IT routes up a company, where you start as a programmer and rise through the ranks, will disappear,’ says Redshaw.

‘Organisations will still need in-house expertise for process design and system design – the strategic aspects at the beginning – and user acceptance testing at the end, but pretty much everything inbetween could be outsourced.’

Marianne Kolding, director of IDC’s European Services Research group, says outsourcing will become more prevalent, but there will still be strong demand for in-house staff able to bridge the business-IT divide. ‘Firms will need people with a good understanding of IT and who understand the business very closely,’ she says.

‘For example, on the customer relationship management side they would need people who understand the environment, the culture and how customers interact with the business. That either means using in-house staff or a trusted service provider that has a very close relationship with your organisation. You could not offshore things like that.’

But Kolding says it is a different story for the purely technical skills. ‘Where work could be carried out offsite, there is absolutely no reason why it should not go offshore,’ she says. ‘And, certainly for the smaller banks, they are unlikely to have enough projects to make it cost-efficient to keep these people on salary.’

Redshaw thinks it is not just developers who will be out in the cold, but also data managers. ‘Integrating different data feeds, cleaning data, extracting information, distributing and publishing it, archiving it – I think all those things will be outsourced in the future,’ he says.

While pure technical skills may be in decline in the financial sector, in three to five years there will be plenty of opportunities for people with skills in areas such as process design, sourcing and integration, fraud prevention, statistical analysis, compliance management and innovation.

In a multi-sourcing environment, financial organisations will need the skills to source the best suppliers, manage contracts and integrate services effectively.

‘The whole sourcing department will become much more rigorous and sophisticated,’ says Redshaw.

‘It will be a permanent, multi-level team, with people setting strategy, looking at best practice and monitoring things on a day-to-day basis.’

As technologies such as business process management give organisations the flexibility to adapt and introduce new business processes more quickly and easily, there will also be greater demand for people with process analysis and design skills. ‘This will be a crucial differentiator in how organisations innovate and stay ahead of the competition,’ says Redshaw.

Consolidation of databases and better business intelligence tools will also increase the need for people who can interpret the information generated and use it to boost efficiencies and generate new business.

‘In the past, when you came up with a new idea for a financial product, it took a long time to implement,’ says Redshaw. ‘But with graphically-driven solutions, you can define a new product – its characteristics, trade lifecycle, and risk profile – and start trading it almost the next day.’

And because new products and services can be developed so quickly, he says there will be a far faster turnaround as financial companies strive to keep ahead of the competition. ‘Once you have a platform that lets you implement new products rapidly, it is the intellectual skill in defining the new products that becomes important,’ says Redshaw.

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