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Even Bankers Can't Afford To Rent In London

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http://uk.reuters.com/article/uk-britain-london-banking-idUKKCN0V41GU

Rents in London have risen so sharply that the one group of young workers usually immune to worries about keeping a roof over their heads are starting to feel the pinch.

While KPMG and Deloitte are thinking up ways of giving their London employees a helping hand, some large banks have come up with another solution: moving jobs out of the city or even out of the country.

Investment banks have started moving back office and IT jobs to Poland and Ireland to cut wage bills bloated by what they consider to be expensive UK-based workers.

Credit Suisse Chief Executive Tidjane Thiam last year estimated the Swiss-based bank could save 230 million Swiss francs a year if it moved almost 2,000 back-office positions out of London.

I work in London and the IT moving overseas is most definitely in full swing , loads culled from my employer over last 2 years

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Well - this is is hardly unexpected but still waiting for the government (all political parties for that matter) to acknowledge it.

Funny all those policies to make us 'competitive' except dealing with the biggest drag on costs of all.

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There are many businesses that can no longer afford to pay wages that cover London rents.....they can only afford to employ single people either living in a room with parents or relatives or HMO shared overcrowded accommodation.

Very many businesses are barely able to scrape together the rent for premises themselves to keep running......priced out London firms and employees, who would've guessed, ;)

Edited by winkie

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"Investment banks have started moving back office and IT jobs to Poland and Ireland to cut wage bills bloated by what they consider to be expensive UK-based workers".

And still they put the cart before the horse :)

Pleased to see these suckers start to feel the pinch of off shoring mind, having worked in and watched it happening in manufacturing and through the noughties, without an iota of sympathy towards the sector being given.

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Pleased to see these suckers start to feel the pinch of off shoring mind, having worked in and watched it happening in manufacturing and through the noughties, without an iota of sympathy towards the sector being given.

Be under no illusions - it's the grunts that are getting offshored. Relatively well paid grunts, I'll give you that (I used to be one), but you can be sure that management and the traders will be staying in London. And whilst housing costs is a convenient excuse, IT offshoring from the city has been going on for 15 years.

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Be under no illusions - it's the grunts that are getting offshored. Relatively well paid grunts, I'll give you that (I used to be one), but you can be sure that management and the traders will be staying in London. And whilst housing costs is a convenient excuse, IT offshoring from the city has been going on for 15 years.

Bully for you. ;)

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Surely it would be easier to offshore the traders, all they require is access the trading tools and apps. Kinda hard for IT to fix a desktop PC if their in poland.

I have wondered why financial trading companies have to be in London. I suspect it is largely a status thing, there's no practical or logistical reason at all why they couldn't be based in a trading estate on the edge of Wolverhampton but that doesn't create the right image with clients or give the director/owner level people the perks of being close to their favourite posh restaurants for "business lunches".

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Surely it would be easier to offshore the traders, all they require is access the trading tools and apps. Kinda hard for IT to fix a desktop PC if their in poland.

Really with remote login tools been standard for 10 years or more

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I work in IT for a bank in London and I'm already working at home twice a week. I expect office space to be reduced further in future so will probably be at home more often. There's nothing in my job that I can't do at home. Personally, I've seen roles move out of London to remote locations for cost reasons only for them to move back as they can't get the staff with the right experience. It depends what they're doing I guess but London and New York are surrounded by people with excellent skills and knowledge.

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Or more and more p*ssed off employees arriving late to London after a brutal two hour commute. Each way.

Meanwhile, the housing benefit bill to allow people that don't need to work to live in London, rises & rises.

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Be under no illusions - it's the grunts that are getting offshored. Relatively well paid grunts, I'll give you that (I used to be one), but you can be sure that management and the traders will be staying in London. And whilst housing costs is a convenient excuse, IT offshoring from the city has been going on for 15 years.

... And of course, they then get those Polish programmers to code the Traders in London out of a job by paying them (a nifty 'labour-arbitrage' pittance) to write algorithms that unwind client's trades in the market auto-magically - simples, sacking traders and replacing them with computers: another trend that's been going on in the City for 15 years ;)

I used to work in an Investment Bank on Canary Wharf writing these algos and now work on the sales side for an electronic trading brokerage in the City: I basically babysit those algos as my hedge fund clients place trades, occasionally taking those clients out to get p*ssed, as someone else here said there's no need for any of them to be in London it's all automated now: frankly if they moved everyone Milton Keynes or something tomorrow I'd be less stressed and richer!

This is such an interesting (and not too often discussed) facet of the housing situation: it's one thing to price out the young but when you start pricing businesses and jobs out of your country's 'economic engine' you start to get very serious problems with your value proposition to the rest of the world very quickly!

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Its no different in high street & corporate banking either. Testing - India, Development - India, IT support - Eastern Europe, onshore grunt work - outside the M25. If you throw a big loop roughly around Cambridge / Milton Keynes / Leicester / Coventry you have a lot of financial services work in the non-glamorous roles like product management, relationship management, project delivery, risk etc....

A job that pays £50k there will only pay max £65k in London. A job that pays £150k there may well pay no more in London. Take the extra £15k for the £50k salaried worker, remove national insurance and income tax at the higher rate, take off the cost of the commute... and all that dreary soul destroying commute might leave you £200 a month better off. Why aren't they offering more than £15k weighting? Add on increased employers NI, pension, bonus expectation, the cost of putting you at a desk and that would probably get to £30k quick enough - that's the cost of a whole extra professional in India.

Would you commute it for £200 a month? Probably not unless you can see it getting to a lot more in a reasonable timeframe.As we know, taking that extra £15k and removing the deductibles doesn't leave you anywhere near what you'd need to earn in order to move there in a like for like property, so that option is right down the toilet.

The permy staff in London tend to be time served (house paid or mortgage cheap- low pressure on their income) or young (happy to live in crap conditions or face a crap commute for the opportunity), or senior enough to be over the sort of pay level required to exist comfortably - and many of them will still commute in order to make it go further.

I work in London at present in projects for a global bank, but I'm a Contractor. I don't live there. I stay a few nights week in a rented room - that and my travel expenses are paid by my company, then I pay myself with what's left. My rate is about £1000 a month more for London than outside the M25. Maths work out OK - a lot of the good work is in London too.

As for WHY the jobs are there - self perpetuating to some extent. The jobs are there because the people are there, the people are there because the jobs are there - ad infinitum. I could recruit 10 reasonably capable project staff with banking experience 5 times faster in London than in Northampton (I know, I've tried). The jobs were there in the first place because it is the capital - London has the Bank of England, London had (for many years not now) the clearing exchange, London has the regulators and politicians, London had a lot of the highly traded and insured commodities (tea, silk) delivered there, traded there, and insured there in the old days, and has the headquarters of their corporate clients and the hedge funds and stock exchange and all of the associated deal making now.

What you do also have holding some jobs in London is the "my team" effect from senior managers. I produced a rather good piece of work for my boss at the request of her boss, that went to his boss, and before I knew it, I had walked each of them through it in turn, tweaking along the way, and was presenting it to the Retail & Corporate Banking CEO, whilst the collection of bosses nodded sagely. I can only do that being in London, which pretty much means the majority (not all) of the people in the top 4 layers of management structure for every part of the bank based in the UK will be in London and have a number of "their people" in London. I am fortunate / unfortunate enough in my current contract to be one of "their people", so much as I would prefer to relocate myself to one of the many offices in the midlands or north for the same rate, it ain't happening. 1-2 days a week fro home now I'm settled in though.

Edited by disenfranchised

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All banks are focused on compensation costs.

It's a well-known fact that most large companies including banks have attempted to move low-skilled IT jobs (which has then happened to more qualified ones) to places like India for several decades but the move to other European locations outside London, as they call "near-sourcing", has existed since I started working in the field.

Even large investment banks like JPMorgan or Citigroup have had technology centres in places like Poole, Belfast and Glasgow for years, obviously to save costs.

The trend is happening in New York as well with a lot of technology roles moving to places with sufficient IT expertise: South Carolina, Texas, Utah...

However, in the last 5 years, the trend has definitely changed with a number of IT Infrastructure and Operations jobs moving to European countries with 1) cheap labour, 2) highly qualified IT workers 3) with fairly good English skills

Places like Poland and Lithuania (and a lot of Eastern Europe) create skilled technology graduates, often with an incredibly good level of English so the opportunity to recruit these young technologists is easy to spot.

When a lot of tabloid media attempts to paint a picture of backward Eastern Europeans, based on a subset of expats from those countries who move to the UK, these are countries which are taking advantage of their human capital: they're certainly not countries with second-rate education.

In this area, the UK has 2 very weak points which makes the future of IT jobs very worrying: 1) the UK does not produce enough quality IT graduates, with a lack of appeal of Information Technology among young people 2) English being the national language

Unfortunately there are plenty of countries who have a large population of young workers who have sufficient proficiency in English to work in a number of jobs.

Edited by samtheman

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Surely it would be easier to offshore the traders, all they require is access the trading tools and apps. Kinda hard for IT to fix a desktop PC if their in poland.

That aspect of "End User Computing", which itself is only a small section of Information Technology in Financial services, would present a very tiny number of IT Professionals.

Even people in the industry are sometimes surprised/confused when they hear that "trading systems" are now designed and implemented by "Technologists".

Goldman Sachs has a 1/3 of its workforce in "IT". Of course those tens of thousands of employees are not repairing someone's PC>

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Be under no illusions - it's the grunts that are getting offshored. Relatively well paid grunts, I'll give you that (I used to be one), but you can be sure that management and the traders will be staying in London. And whilst housing costs is a convenient excuse, IT offshoring from the city has been going on for 15 years.

It depends what you define as a grunt. I'm seeing more and more highly qualified, senior, IT roles ending up in other European locations, roles that could probably command a six-figure salary in London in some cases.

Certain development and support teams have several levels of management in locations like Lithuania or Czech republic.

Some London employees now report to the managers inside those structures.

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