Ten years ago, the best and brightest accountants, armed with a fresh ACA, would gravitate towards the investment banks for a job in product control. Hundreds of accountants from South Africa, Australia, New Zealand and the UK were hired annually to work in locations as diverse as London, New York and Singapore, often with an eye to gravitate towards the front office in the long term.
In a sign that this has come full circle, a new location is emerging as the place to base investment banks’ product control functions – South Africa.
Barclays is in the process of shifting its fixed income product control functions to Johannesburg, the first phase of which will be the for the comparatively straightforward flow rates division, according to sources close to the situation.
Sean Lamprecht, a former divisional COO for Barclays Capital who was working as global business leader for credit trading structured credit products and DCM at HSBC until October last year, is now heading up Barclays’ offshore product control operations in South Africa. Peter Henderson is leading its rates product control business in the country.
Barclays is not the only bank carrying out product control functions in South Africa. Standard Chartered is also moving its business to Johannesburg, led by Matthew Mallach, head of global markets finance and product control, Africa, who was director of product control at Barclays in London and Singapore until December last year.
Product control has long been an area where banks are trying to cut costs by offshoring to ever cheaper locations. First, they moved the functions away from London and New York towards the back office centre of Singapore, but this is no longer cost effective. “The cost arbitrage of carrying out back office functions in Singapore available five years ago is no longer there,” says Craig Brewer, a director at recruiters Five Ten Group in Singapore, which works with banks on their product control recruitment. “The cost of real estate has made it too expensive to base large operations here and the rising cost of living has made salary demands uneconomical for a lot of banks.”
Product control jobs in the UK can still pay six figures – after just three-five years post qualification salaries come in at $110-150k in London, according to Robert Walters, rising to $130-190k at the senior end. However, it’s one of the few accounting roles in the City where pay has gone down over the past 12 months. In Singapore, it’s possible to earn more at the senior end – up to $240k, according to Robert Walters, and mid-level roles pay salaries of $70-110k.
“South Africa offers a huge pool of trained accountants, who would have normally looked overseas for a high-paid job in investment banking,” says another accountancy recruiter who declined to be named. “By offering decent salaries for the local market, but still around 40% lower than London or Singapore, banks are tapping directly into that talent pool. The same goes for locations like India.”
Salaries for South African finance professionals rose by 10-15% in 2013 and are expected to do the same again this year, according to Robert Walters.
“Product control has become a centralised function, carried out in increasingly cost effective locations, whether that’s India, South Africa or the Philippines,” says Brewer. “Banks hired hundreds of people from South Africa, India and other parts of Asia for infrastructure roles in Singapore during 2006-07 and now the process has come full circle.”
Deutsche Bank employs around 1,900 people in its Deutsche Knowledge Services subsidiary in the Philippines performing accountancy, operations, IT and risk functions. More recently, suggest recruiters, product control positions have also been included.
Barclays didn’t respond to request for comment.