I would be curious to learn what people on the forum think about the prospects for recovery in the computational/quantitative finance job market. I don't know how accurate my impression is. I'm be curious to learn what others think and whether I'm off base.Right now the job market for software engineers and electrical engineers seems like it is better than it is for people in quantitative finance. There were tens of thousands of people who lost their jobs in the crash of 2008. Many of these people were very experienced. Although some probably left finance (MathBabe comes to mind), others are still in the job market, so it is very much an employer's market, rather than an employee's market."Wall Street" and banking are going through huge changes. Starting January 1, 2013 (in the US) any bank that accepted government money during the crash (and that's pretty much all of the banks) is barred from proprietary trading. They can still hedge their risk, but after the example of JP Morgan, the regulators are (supposedly) starting to look at hedging more closely. Since banks like Goldman, JP Morgan and Meryl Lynch (etc...) don't have proprietary trading groups some of the historical paths to quant jobs have disappeared.There are still quant jobs of course, but they have moved to hedge funds and investment funds. Some of these, like Blackrock, never accepted government money and are very large. But it is an employers market. As a result, the salaries are remarkably low, relative to the cost of living. A talented software engineer with BA or MS and a few years of experience can make near what a quant in New York makes. However, the software engineer can live in California. Even San Francisco is much less expensive than New York and you can have a better quality of life for the same salary. All things go in cycles. At some point I hope that things will improve and the funds will start hiring and it will become more of an employee's market. Unfortunately I can't predict when this will be. My guess is that as the economy improves the "Wall Street" job market will improve.What do "y'all think"?Thanks,Ian

It's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". They can buy a license for a ready-made package and hire an IT guy to hook it up for 1/2 of quant's salary. So a lot of the quant jobs will simply disappear and never come back, even if the economic boom comes back.It's like hand weavers being replaced with Jacquard machines.

QuoteIt's like hand weavers being replaced with Jacquard machines. That's a not too incorrect analogy IMO. Business and technology are constantly changing, in cycles of [10,15] years?

QuoteOriginally posted by: katastrofaIt's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". Something like this happened in IT also, but it did not affect the headcount. Banks used to have their own ticker plants for market data. Banks used to develop their own FIX servers. Now banks buy FIX engines and market data. But the IT headcount has increased.

QuoteOriginally posted by: lexingtonQuoteOriginally posted by: katastrofaIt's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". Something like this happened in IT also, but it did not affect the headcount. Banks used to have their own ticker plants for market data. Banks used to develop their own FIX servers. Now banks buy FIX engines and market data. But the IT headcount has increased.But IT constantly changes, so you need experienced people or atleast people who can adapt fast. Quant in my opinion does not change. Also Quant is like IT except business side affiliation. The cost of a quant is artificially high compared to the supply. Plus IT programmers have fungible skills so salaries cannot drop and have to keep up with Industry standards. Although Quant skills are in high demand elsewhere, the salaries are significantly lower than good IT salary in all industries.

QuoteOriginally posted by: lexingtonQuoteOriginally posted by: katastrofaIt's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". Something like this happened in IT also, but it did not affect the headcount. Banks used to have their own ticker plants for market data. Banks used to develop their own FIX servers. Now banks buy FIX engines and market data. But the IT headcount has increased.A rough estimate for any software product is that you only need 2-3 developers to create a products but > (>>?) 40 to maintain it. It's part of the Software Crisis. QuoteProjects running over-budget.Projects running over-time.Software was very inefficient.Software was of low quality.Software often did not meet requirements.Projects were unmanageable and code difficult to maintain.Software was never delivered.

QuoteOriginally posted by: CuchulainnQuoteOriginally posted by: lexingtonQuoteOriginally posted by: katastrofaIt's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". Something like this happened in IT also, but it did not affect the headcount. Banks used to have their own ticker plants for market data. Banks used to develop their own FIX servers. Now banks buy FIX engines and market data. But the IT headcount has increased.A rough estimate for any software product is that you only need 2-3 developers to create a products but > 40 to maintain it.You did not get my point. Banks stopped developing some products. They started buying them. But IT headcount has increased in the past 10 years because they are developing new products which are still not "market standard".

QuoteOriginally posted by: lexingtonQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: lexingtonQuoteOriginally posted by: katastrofaIt's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". Something like this happened in IT also, but it did not affect the headcount. Banks used to have their own ticker plants for market data. Banks used to develop their own FIX servers. Now banks buy FIX engines and market data. But the IT headcount has increased.A rough estimate for any software product is that you only need 2-3 developers to create a products but > 40 to maintain it.You did not get my point. Banks stopped developing some products. They started buying them. But IT headcount has increased in the past 10 years because they are developing new products which are still not "market standard".Fair enough. Does this change things? It just shifts the impending collisions.

QuoteOriginally posted by: CuchulainnQuoteOriginally posted by: lexingtonQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: lexingtonQuoteOriginally posted by: katastrofaIt's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". Something like this happened in IT also, but it did not affect the headcount. Banks used to have their own ticker plants for market data. Banks used to develop their own FIX servers. Now banks buy FIX engines and market data. But the IT headcount has increased.A rough estimate for any software product is that you only need 2-3 developers to create a products but > 40 to maintain it.You did not get my point. Banks stopped developing some products. They started buying them. But IT headcount has increased in the past 10 years because they are developing new products which are still not "market standard".Fair enough. Does this change things? It just shifts the impending collisions.IT/quant jobs are not going to disappear. these jobs may require new skills.

QuoteOriginally posted by: lexingtonQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: lexingtonQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: lexingtonQuoteOriginally posted by: katastrofaIt's not just cyclical. Banks have realised that they don't have to hire people to write them yield curve bootstrapping code reimplementing the "market standard". Something like this happened in IT also, but it did not affect the headcount. Banks used to have their own ticker plants for market data. Banks used to develop their own FIX servers. Now banks buy FIX engines and market data. But the IT headcount has increased.A rough estimate for any software product is that you only need 2-3 developers to create a products but > 40 to maintain it.You did not get my point. Banks stopped developing some products. They started buying them. But IT headcount has increased in the past 10 years because they are developing new products which are still not "market standard".Fair enough. Does this change things? It just shifts the impending collisions.IT/quant jobs are not going to disappear. these jobs may require new skills.I agree. What are these new skills?

QuoteOriginally posted by: Cuchulainn I agree. What are these new skills?ask the hiring managers

iank to answer your question. This is my take on what happened.a) the demand for quants came from derivatives pricing.. that's why you had all these MSC in quant finance etc. teaching derivatives pricing (rather than on quant trading)b) that demand was driven by new products constantly being developed and ensuing profits. but there is no demand for new exotics.c) the cost of capital both for economic and regulatory reasons has increased so that running a derivatives trading book is no longer very profitable.d) models may be adapted now for dealing with credit issues, but this is a cost rather than producing profitskatastrofa's point needs some analysis: I feel you have had software suppliers for the last 10-20 years. The point ( I believe) is that previously the risk of taking an outside software system was that it slowed down the development of the profitable new products. now that there is little demand for new products these software packages have few risks.I don't see c) and b) improving in the next 10 years.Clearly quant trading is not affected by b) but cost of capital is presumably still a concern, and I feel that that the drop in demand from exotics derivatives means that the salaries of other quants are not going to improve even as the economy improves.

Quotea) the demand for quants came from derivatives pricing.. that's why you had all these MSC in quant finance etc. teaching derivatives pricing (rather than on quant trading)Quant trading is less maths and more programming than traditional quant work?

Isn't this just division of labor at work? Perhaps banks have found it easier to specialize in investing/trading, and have left the quant work to be done elsewhere.