eFinancialCareers

The short answer would be very. IT budgets are facing double-digit reductions, more redundancies are on the cards, and projects are being put on ice. But… there are opportunities out there.

Merrill Lynch, formerly Wall Street’s biggest tech spender at around $4bn annually, is set to slash technology headcount radically, and aims to save around $7bn through the Bank of America merger. And the effective elimination of Bear Stearns and Lehman Brothers from the technology pot has made things look very grim indeed.

And things could get even worse, once budgets for 2009 are finalised. Robert Iati, partner and global head of consulting at Tabb Group, says: “Every investment bank is reconsidering what they had planned as recently as six months ago. We expect technology spend to fall by nearly 20% in the US and 10% in Europe next year.”

However, both Credit Suisse (which increased tech headcount by 400 in Q3) and Goldman (which spent £23m more on technology in the third quarter of 2008 than the same period last year) show that IT hasn’t been put on the back burner entirely. And there are more bright spots.

“Banks are fearful of reducing spending in revenue-generating areas on the institutional side, and we expect to see at least modest growth in things such as advanced trading,” says Iati. “Connectivity is important, particularly in Europe, and risk management will see double-digit spending increases. However, any back office or operational functions will see sharp cutbacks.”

Chermaine Lee, analyst at Celent, names a few other key areas, namely: “OTC derivatives automation and collateral management, risk management and compliance, reducing counterparty risk, clearing and settlement, particularly for credit default swaps (CDS) and efficiency projects,” she says.

Paul Thoma, director of i-banking technology recruiter Garthorne Associates, says: “There’s definitely hiring activity within particular front and middle office functions, but the volume of jobs looks bleak, especially when compared to the large number of candidates now on the market.”