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HovelinHove

Outsourcing Financial Services, What About The City?

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This isn't off topic as the City has been the driver of our recent mini-boom in London and since the service sector now accounts for 70% of our economy it is highly relevant to house prices. This is the question I want to ask all the trader types who frequent this forum:

Loads of back room jobs and telesales jobs are going East, what is there to stop trading floor jobs being outsourced too? With the web why do you need a broker in London at all, you can trade on any exchange from anywhere in the world. How much of what happens in the square mile and the Wharf could just as easily be done in Mumbai by someone who thinks a 10k bonus is like winning the lottery rather than beer money?

If some of the big investment banks woke up to this our economy could really be buggered as we have nothing else propping it up.

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This isn't off topic as the City has been the driver of our recent mini-boom in London and since the service sector now accounts for 70% of our economy it is highly relevant to house prices. This is the question I want to ask all the trader types who frequent this forum:

Loads of back room jobs and telesales jobs are going East, what is there to stop trading floor jobs being outsourced too? With the web why do you need a broker in London at all, you can trade on any exchange from anywhere in the world. How much of what happens in the square mile and the Wharf could just as easily be done in Mumbai by someone who thinks a 10k bonus is like winning the lottery rather than beer money?

If some of the big investment banks woke up to this our economy could really be buggered as we have nothing else propping it up.

A few reasons I could think of;

1. Time zones.

2. Mission critical nature of the markets/investment sector.

3. Many directors come from a financial background and would be reluctant to surrender these areas to overseas traders.

4. Communication in a time critical environment (I struggle to understand many of my Indian colleagues..and so do our customers!!!).

5. Cost adavntage wouldn't last long. The Indians would know how much they are worth and eventually squeeze more money out of their emloyer. Look at the employee turnover levels in the outsourcing companies, many report huge increases in revenue but still struggle to make money.

6. Customer perception.

On the other hand;

1. Outsourcing is here to stay.

2. Most of my Indian colleagues are very good at their jobs.

I may be wrong on many items I have stated. Would love to hear other arguments.

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How much of what happens in the square mile and the Wharf could just as easily be done in Mumbai by someone who thinks a 10k bonus is like winning the lottery rather than beer money?

Hrm, it's more to do with trust and the legal framework, and London has a good cluster effect. Whatever the traders earn is nothing compared to what they drag in, those who aren't any good are turfed out. There are traders in Mumbai of course, if they're worth their salt they'd already be in London making a mint.

The paralegal and back office stuff will be shipped out, however.

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what is there to stop trading floor jobs being outsourced too?

For example?

Do you mean Management, Traders, PAs, IT? Others??

Responsibility is unlikely to be outsourced (often due to juristriction and legal constraints). Furthermore Management (senior staff) are unlikely to outsource their own jobs. These individuals (currently) prefer local support (in all its forms) - so direct support functions are also unlikely to be outsourced. Highly specialised, dynamic environments will also IMO be difficult to outsource. Hopefully B)

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With the web why do you need a broker in London at all, you can trade on any exchange from anywhere in the world.

A market doesn't just support itself, there are countless market makers and counterparties in the City.

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For example?

Do you mean Management, Traders, PAs, IT? Others??

Responsibility is unlikely to be outsourced (often due to juristriction and legal constraints). Furthermore Management (senior staff) are unlikely to outsource their own jobs. These individuals (currently) prefer local support (in all its forms) - so direct support functions are also unlikely to be outsourced. Highly specialised, dynamic environments will also IMO be difficult to outsource. Hopefully B)

He he! I hope so too.

B)

It's worth noting that some of the technologies used are so bespoke, it's very hard to replace the staff. We lost one chap last August, the post is still vacant. I love working in the sector, hard work but good rewards (unlike the engineering sector I used to work in) and intersting stuff too.

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For example?

Do you mean Management, Traders, PAs, IT? Others??

Responsibility is unlikely to be outsourced (often due to juristriction and legal constraints). Furthermore Management (senior staff) are unlikely to outsource their own jobs. These individuals (currently) prefer local support (in all its forms) - so direct support functions are also unlikely to be outsourced. Highly specialised, dynamic environments will also IMO be difficult to outsource. Hopefully B)

agree its only the poorer quality jobs that have and will continue to be outsourced. top city jobs simply do not fall into that category.

Edited by Milkshock

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A few reasons I could think of;

1. Time zones.

2. Mission critical nature of the markets/investment sector.

3. Many directors come from a financial background and would be reluctant to surrender these areas to overseas traders.

4. Communication in a time critical environment (I struggle to understand many of my Indian colleagues..and so do our customers!!!).

5. Cost adavntage wouldn't last long. The Indians would know how much they are worth and eventually squeeze more money out of their emloyer. Look at the employee turnover levels in the outsourcing companies, many report huge increases in revenue but still struggle to make money.

6. Customer perception.

On the other hand;

1. Outsourcing is here to stay.

2. Most of my Indian colleagues are very good at their jobs.

I may be wrong on many items I have stated. Would love to hear other arguments.

You make a very valid point here, and I would agree the writing is on the wall.

India now provide very good financial services, many companies now outsource the financial and accounting element of their business offshore.

1. Time Zone is of no consequence, follow the Sun is now in operation across the board.

2. Mission Critical Nature of the task. Technology is at the speed of light, India, London, thats 2cm in IT Terms.

3. Directors do not get to decide, shareholders drive the decision making process today for the short term.

4. Indians are improving weekly in terms of language, the next generation have English as first language.

5. With the market crash in India, Wage inflation is heading south driven by the Chinese emerging market.

6. Customer Perception not a problem, traders are back office, no direct contact.

Looks like a done deal to me.

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Guest Guy_Montag

agree its only the poorer quality jobs that have and will continue to be outsourced. top city jobs simply do not fall into that category.

I think the poorer quality jobs were the first to be outsourced, now as we get more comfortable with outsourcing we are seeing more skilledl jobs going abroad.

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You make a very valid point here, and I would agree the writing is on the wall.

India now provide very good financial services, many companies now outsource the financial and accounting element of their business offshore.

1. Time Zone is of no consequence, follow the Sun is now in operation across the board.

2. Mission Critical Nature of the task. Technology is at the speed of light, India, London, thats 2cm in IT Terms.

3. Directors do not get to decide, shareholders drive the decision making process today for the short term.

4. Indians are improving weekly in terms of language, the next generation have English as first language.

5. With the market crash in India, Wage inflation is heading south driven by the Chinese emerging market.

6. Customer Perception not a problem, traders are back office, no direct contact.

Looks like a done deal to me.

I work in the City witin IT and I agree.

All banks are outsourcing to India, Poland, Russia and they are now looking at China.

They also near source to Ireland, Scotland.

They are now looking at outsourcing Research staff.

I find it hard to believe that they would outsource Front Office staff however think of the scenario;

Your boss asks you in and asks you to start up an equity trading desk in India. He offers you a huge ex pat package and guarenteed bonses and locks you in for a couple of years.

I know I would do it.

Most of our India staff work up to 3.00 pm so asking them to work until 5 wouldn't be a problem.

It only takes one person to fall in line with Management for things to be moved. Humans are selfish !

It's just a matter of time !!!

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I too work in IT, our support staff are global, there to be called at any time.

I agree with the front office comment, we too have long debated that issue, its not going to happen communications involve everthing from Culture to Geography.

However a simple google for Offshore, BPO, or similar will reveal the extent of the issue.

A good site if you all want a wakeup call is

http://www.isyourjobgoingoffshore.com/

Its happening, will it end in tears?. Time will tell !!!

One thing is for sure, its a one way trip, the skills lost post transition are not currently measured but large gaping holes are already being found in this cost cutting excercise.

Example is......Life Cycle of a grad would be to start at bottom, work way up, then get to the position of going out and winning new business, that cycle is now broken. If you cannot communicate a convincing line with sceptical customer, then you will win nothing but scorn.

Edited by laurejon

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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