With trading positions tipped to slump by 12,000 globally by 2011, could IT departments be set for serious downsizing?

The short answer is yes, but it’s not a completely grim picture. The latest edition of Global Market Analysis and Forecasts – Trading Technology, by Kimsey Consulting, predicts that the US and Western Europe are going to bear the brunt of the redundancies.

Stephen Kimsey, the report’s author, tells us: “IT departments have been expanding quite rapidly since the last downturn in 2001 and there is room for cuts. It stands to reason that if you’re making cuts on the trading floor, you don’t need as many IT people to support those areas.”

However, the report predicts that a growing sophistication of solutions and increasing reliance on technology within the trading space will still mean a relatively modest spending increase of 4.3% by 2011.

“I’m aware of a number of institutions who are recruiting on the IT side, because they are embarked on long-term projects that they simply cannot and will not pull out of,” says Kimsey.

The spending increase has been buoyed by an expansion of financial, commodities and energy trading in Eastern Europe, the Middle East and the Asia-Pacific region.

Clearly, looking east is the way to go. Kimsey reckons both international and domestic investment banks face a serious skills shortage there, and staff turnover of 20-30% due to headhunting is driving salaries northwards.

“I think there will be an increasing trend for people to look towards these markets, as well as banks looking to transfer people internally rather than letting them go,” says Kimsey.

The trading applications sector is worth $47bn and is tipped to grow by 3% by 2011. The report covered over 50 countries.