We dedicated one of the first ES Edge releases to the development of offshoring, tracking the trend from its original purpose—a cost-cutting measure designed to shift administrative risk functions, such as reporting and portfolio management, away from expensive labour markets—to what it has become: the creation of decentralised risk teams working across multiple centres in a globalised financial platform. You can find that article here.
This week, we take a deeper dive into the talent dynamics offshore, elaborating on the interconnectivity with primary hubs like London, Paris, and New York City, and redefining offshore/nearshore centres as reservoirs of high-calibre talent.
Decentralised Structures
Decentralised risk team structures within investment banking teams (particularly in markets businesses) are becoming increasingly common; individuals based in primary business hubs, such as London, now work alongside colleagues in regional English offices and offshore centres. In many cases, these centres are in Europe, but Indian offices are gradually catching up in terms of complexity. In such decentralised structures, communication flows more freely between different offices, and responsibilities are more evenly distributed than in the past, when offshore teams were seen as separate support functions.
The evolution of homogeneous, decentralised risk teams is tripartite: stemming from (i) hybrid working policies during COVID-19; (ii) attempts in the UK to decrease reliance on London and spread expertise to regional cities like Birmingham, Manchester, and Edinburgh; and (iii) the burgeoning strength of offshore talent pools.
Investment banking roles are among the most lucrative and sought-after in the offshore market, attracting top-tier university graduates. The percentage of offshore analysts with master’s degrees is markedly higher than in the UK, and these graduating classes are highly competitive. Generally, decentralised team structures cultivate offshore junior talent very effectively, ensuring analysts and associates gain exposure and skills more closely aligned with their onshore counterparts.
Mobility Into Primary Hubs
One characteristic of decentralised team structures is a resistance on the part of the organisation to internal relocation—once a common trend, now becoming increasingly rare. Relocating an individual onshore to perform the same responsibilities as offshore counterparts increases labour costs without a proportional gain in output or performance. Broadly, there is less incentive for franchises to justify internal relocation.
Despite restricted internal mobility, offshore risk churn rates are rising sharply, particularly at the associate level. Even post-Brexit, precocious and highly capable talent is drawn to the London market, primarily enticed by the city’s reputation rather than a tangible difference in the work completed. Historically, offshore talent has been willing to compromise on compensation packages, often relocating at a slightly lower rung of the corporate ladder. However, as the chasm between onshore and offshore talent closes, relocators now expect to be benchmarked against internal talent. We expect this dynamic to continue shifting.
Boutique and T2 banks, which may struggle to compete onshore on salary with T1 players, take full advantage of offshore centres. The offshore market is often the first place franchises turn when filling certain associate positions, especially in the markets space. This is partly because, generally, corporate hierarchies in London are becoming increasingly inverted: there exists a bloated layer of Vice Presidents and Directors. Equally, risk graduate schemes are less popular than commercial schemes, and internships don’t always yield permanent hires. In contrast, offshore teams tend to be intentionally bottom-heavy, teeming with analysts and associates eager to move to London.
Senior Talent
So where does senior offshore talent fit into all this? The repercussions of high churn rates at the junior level are considerable. Firstly, churn slows the progress of any team, which is frustrating for team leaders. Secondly, rapid churn impacts morale at all levels: juniors face increased pressure to cover delivery gaps, while senior colleagues investing in mentorship see fewer long-term returns on their efforts. It also becomes increasingly difficult to foster an apprenticeship environment when talent frequently use the platform as a stepping stone to onshore roles.
Moreover, when promising talent is poached at a junior level instead of making their way up the corporate structure, the leadership pipeline becomes strangled. There is a real danger that the next generation of offshore leaders will emerge from a pool of lower-performing or less motivated talent. This risk is compounded by the fact that a large portion of senior-level decision-making remains in the central business hub, leaving offshore senior talent with limited authority and progression opportunities.
How Should Offshore Teams Respond?
There are two strategies banks can employ to stem the churn of offshore risk teams. The first is to increase liquidity between offshore and onshore centres, offering the prospect of internal moves. The immediate costs of visas and labour are an obvious deterrent, but reducing churn offers a greater return on talent investment over the long run. Equally, backfilling talent is also expensive — a point all recruiters love to make.
The second strategy would involve increasing incentives for talent to remain offshore. This could mean allocating additional budget for offshore compensation growth while looking to fast-track high performers up the leadership chain with preemptive promotions (which would also tie up talent with longer notice periods). Equally, shifting some decision-making power to senior offshore figures would reward those who rise through the corporate structure with greater global responsibility.
Eversearch provides executive search and modern talent solutions exclusively to the risk and finance sectors.
We are true sector specialists and partner with a select group of core financial services clients that demand best-in-class talent. Many of our clients have partnered with us over several years. We are an extension of their in-house talent strategy and are trusted advisors. We know their operations well and have great instincts on how to navigate challenging talent pools to deliver consistent results.
Risk has emerged as one of the most important business functions across complex financial services institutions. While many of our competitors now cover the sector, our differentiators are our depth of experience, thorough insights, and proven ability to deliver on otherwise hard-to-find talent.
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