Jo Blayney, of Blayney Personnel, talks to DerivSource about how fluctuations in the industry can affect the benefits of contract and permanent work.
Q. What kind of trends are affecting recruiting in the industry right now?
A. We tend to recruit for mainly operational roles and it’s mainly from junior director level down to clerk level. The big hotspots for hiring at the moment for us are operational risks and control, and anything regulatory change related. We’re also seeing push on the OTC derivatives client clearing side.
What we’ve seen from the operations world is that the banks are trying to do a lot more for a lot less. There is a massive pressure on costs. What is interesting is the way in which the banks are trying to realise their goals in the market whilst at the same time trying to deliver headcount reductions and cost savings. Near shoring, off shoring and “smart sourcing” seem to be buzz words for the industry.
Q. Is there a change in demand for contract versus permanent roles?
A. It’s kind of a moving target at the moment with regards to the mix between contracts and permanent staff because of the growing offerings of consultancies, which complicates the traditional staffing dynamic. Each time an organisation or one of the banks needs more people to do something they have got three distinct options: permanent, contracts or consultancies. The consultancies traditionally used to be able to charge premium rates to get anything done on the basis that they had the unique knowledge in the market to perform a certain task. However, as their knowledge becomes more commoditised in the market, the banks either drive down the consultancies’ charges or they will hire a contract or permanent member of staff. The permanent route tends to be the most cost effective way if you know you’re going to need somebody doing that job for 2+ years. Contractors doing the same role will be earning around one and a half times what a permanent member of staff would be. Add in the mix the budget outsourcing offerings and you’ve got a real blend of demand.
For example, for one of our clients, last year it was all about headcount. The client had to be seen to be reducing headcount so of course they shifted many of the roles to consultancy firms. However the kind of people those consultancy firms were delivering I can only describe as pretty raw. By the following year, the client was paying margins way above what they would be able to pay if they were doing it direct. This is not an isolated incident. Soon the headcount focus goes out of the window, and then it comes down to cost. There are counter arguments around “time to market” though. Nothing’s a straight-forward choice.
Q. What are the motivations to go contract if there is no major benefit for the company?
A. It is harder to justify a permanent member of staff if you’re supposed to be implementing a new system with a set delivery date. If you’re wanting someone to run a process though, you really need them in permanently, (unless this is a permanent outsourcing arrangement). Many contractors in the market have an in-demand skill set; they don’t see the need to go permanent because they earn so much more money as a contractor. At least while their skill set is relatively scarce. It’s a simplistic view but is generally held as true.
Q. Are there any risks for individuals in the industry at the moment?
A. There are certain roles in operations that are pretty much on their last legs for being based in London. Anyone who has got that skill set would be desperately keen to get a permanent role even if it was paying two thirds of what a contracting role would pay. They tend to know their roles are on the way out. We’re seeing settlements, payments, reconciliation, and static data – all those that would be traditionally described as back office, are either on the way out of, or have already left, London.
Whereas individuals working as, for instance, operational risk control specialists, client money and CASS specialists, regulatory reporting or specialists in OTC client clearing could stay contracting because generally bank bonuses are on the small side in relation to times past. Many times they’d rather get a bonus in the daily rate “upfront” while their skill sets are still in demand. Individuals who have in demand skill sets are in a strong bargaining position to stay contracting and make more money. It makes sense to make to most of your “moment in the sun”.
Generally the banks are more cost-conscious than they have ever been. There are so many different pressures on the banks right now that they can’t act in the same way or have the same set of rules for all parts of their operations. They need to juggle headcount to hire in the ops regulatory space whilst outsourcing, off shoring or near-shoring other roles to stay headcount neutral.
Q. How is regulatory reform impacting the way financial institutions are hiring for both contract and permanent roles?
A. With regulation, all firms face the same challenges and have to make similar choices. Regulatory reform, being relatively new to the industry in its scope, shows there is a shortage of staff with the skills to support these new regulatory-driven processes, and this is one area where the consultancies are stepping in. However, the results the consultancies achieve aren’t always meeting the high standards the banks expect. For instance, one client hired a consultancy to fill a role within their CASS team, but the resource lacked the experience, or prior knowledge, and didn’t produce anything the client couldn’t have done themselves. But they’d paid a consultancy rate synonymous with a top level direct hired candidate. Again, this isn’t an isolated incident.
About 10 to 12 years ago everybody thought credit default swaps (CDS) were the stuff of madmen’s dreams and full of wizardry and pokery and nobody really understood what was going on apart from the guys who worked with them. It was in the interest of Credit Derivative Ops people to maintain the facade that they were very complicated products, seeing their salaries increase accordingly. I sometimes wonder whether all the regulatory roles may be a repeat of history… how complex are they all really?
Q. Do you have any advice for how professionals can build their own personal brand?
A. A lot of the time the banks are coming to me to find someone who can do a job already so their primary aim is to find somebody with the relevant experience. Next it’s making sure that they have the knowledge, are friendly and will work hard. It’s less soft skill oriented when they come to a recruitment company like our own. However, if we can deliver someone with all of the experience who has got those soft skills it’s going to be a lot easier to get them the job. Soft skills are never going to be negatives. If you can show that you have a passion about the subject that can sometimes make up for a lack of physical experience.
Another bit of advice is to keep your LinkedIn profile updated and as full as possible. Linkedin effectively acts as a big database for recruitment companies. Make sure it is laid out how you’d want your own CV to go out. Make sure that everything is bullet pointed not just a long piece of prose and make sure you drop in every buzzword related to your role so you can be found. Once you have been found you can prove how wonderful and outgoing you are with good communication skills and prompt replies to calls or mails. If you do not have those other “hard skills” on your profile then you won’t be found and you won’t be able to put those things across. Just remember: If someone was searching for people who’ve done your job – what would they type into a search engine?
On the other side of the coin, I see a genuine opportunity for banks to look at near shoring – out sourced solutions. A solution if done with the right supplier could be an area of growth for operational hiring in the future. Locations based within quick and easy reach of London to allow mobility / commuting of currently employed banking staff who may be seeing their roles go soon. This could represent the future of investment banking operations – Scalable, manageable and without the loss of knowledge and experience often associated with out sourcing, off shoring and near shoring processes. Operational staff should keep one eye for future developments of these employers. They could be a source of roles for the future and be a lot closer to their homes!
