The management consultancy Bossard has carried out a survey into the implications of the single European currency on the financial services industry and says that one medium-to-large bank will need to employ 750 extra man years of effort on information technology - at a cost of pounds 170m.
Although there is a huge pool of IT skills, Bossard believes it will be nothing like big enough to satisfy demand. Computer systems in most organisations, but most urgently in banks, will have to be converted to cope with the euro - this work will have to start next year if it is to be ready for the full introduction of the new currency in 2002. If only half the work is done by outside specialists, the medium-to-large bank would have to bring in an extra 80 people for four years - the pressures will be much worse if the changeover period is shorter.
Shahram Nikpour, Bossard's financial services partner, said that some German banks had already put down "premiums" with software and computer systems companies to make sure they have first call on the skills they will need. US banks are thinking along the same lines, he added.
But because no-one is sure when or if the currency is being introduced, the deals are being structured in the same way as an option so that the banks can take the people if needed. "It seems sensible to them," Mr Nikpour said. "They can specify exactly what skill set they will require." He said UK banks were worrying about the problem but were "well behind the Germans and Americans".
Although only one-off deals have been completed so far, Mr Nikpour believes a "skills options market" could develop. A standard form of option is likely to emerge, and a "grey market" could evolve later to trade skills. It would work rather like a slave market, except that the slaves would probably earn more than their masters.
IT work has already become a sensible career choice for financially challenged youths. The "Year 2000" problem - the inability of most computer systems to differentiate between 1900 and 2000 - has created a huge demand for skills to reconfigure software and pushed pay rates up by 20 per cent.
The shortage surrounding the introduction of the euro should mean this boom continues - but for IT companies to benefit from the bonanza Mr Nikpour says they must be careful not to over-commit themselves. Options contracts would include severe penalties if they failed to deliver the skills promised. "Because it's in the future, they may be over-ambitious," he said. "If someone said to you they wanted a contract for 100 people and would pay 25 per cent of the full cost now, what would you say?"
Although banks are likely to be affected earliest, he said the problem would spread to all sectors of industry. "This is an unprecedented opportunity. Com-panies face huge risks in the process of gearing up for the euro, while the IT industry faces a considerable business opportunity." He added that only an early and co-ordinated pan- European review of the demand would avoid chaos.Reuse content