Jobs are not an issue, but salary boom is over
Krish Mohan (name changed), an investment banker in Mumbai, says nothing much has changed in his life, except that the phone calls from potential recruiters have suddenly stopped coming.
“I used to get at least two job offers a month till just three months back. The phone calls were irritating as the job hunters were extremely persuasive. But I do miss the calls now,” Mohan says. Mohan isn’t alone. Investment bankers, who were pampered like kings by their employers over the past few years, are now struggling to come to terms with the new reality: the boss knows the job market isn’t that great any more, and the days of sky-rocketing salary demands are over — at least for now.
“It’s a little surreal,” says one employee of Merrill Lynch India, which announced its sale to Bank of America yesterday. The mood among Merrill staff in India is a mix of anxiety amid the uncertainty, but also some initial optimism over the bank’s sale to Bank of America.
But overall, the speedy redrawing of Dalal Street’s financial landscape following the Lehman collapse and the Merrill sell-out has made matters worse. “Demand and supply will create its own balance of compensation for investment bankers,” says Ashok Wadhwa, managing director of Ambit Corporate finance, the largest home grown investment bank that recruited three top bankers from Merril Lynch yesterday
However, nobody is saying Indian investment bankers will be groping for jobs. “These are highly talented people and will always be in demand. It’s just that the crisis will have a sobering effect on expectations,” says the CEO of a top headhunting firm. For example, barely hours after Lehman announced its bankruptcy, Infrastructure Development Finance Corporation, a subsidiary of HDFC, went public with its desire to hire the employees of the US firm’s investment banking business. Besides, the past few months have seen some high-profile appointments in many of the leading investment banks in the country.
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Apart from established domestic investment banking firms, there are a host of other financial services firms who now aspire to get into investment banking business in view of the relatively lower entry cost.
R Suresh, chief executive officer, Stanton Chase International, a leading placement firm, says mid-size Indian companies have always been wary of dealing with large size Wall Street bankers.
“So clearly some financial services firms would diversify to the investment banking business to cater to the need of such mid-size firms. They would need investment bankers,” he says.
Besides, private equity firms – a host of Indian companies have got into this business recently – will lap them up. Others feel some of the highly talented bankers could use this opportunity to shift to ventures of their own. Says Suresh, “some of the Lehman employees are aiming to start hedge funds while some others are searching for opportunities in private equity firms,” said R Suresh, chief executive officer, Stanton Chase International, global head hunting firm.
There are different teams being formed out of nearly 200 employees of the local office of Lehman. Some of these teams may start their own hedge fund or private equity fund.
“Investment bankers are smart people they will look at entrepreneurial ventures to overcome such crisis,” says Deepak Gupta, India head, Korn/Ferry International.
Some investment bankers say there is nothing to worry as only a handful of banks are slimming down staff levels. The overall impression is markets go through boom and bust cycles. This is obviously a bust time, but no investment bank can afford job cuts so deep that they inhibit future revenue growth.