WEBVTT - Wall Street Speeds Up India Expansion

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>If you see the job openings, it's for a senior role,

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<v Speaker 2>a software engineering role in high level.

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<v Speaker 1>Yeah.

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<v Speaker 2>If you scroll below, there is something related to audits

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<v Speaker 2>this technology.

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<v Speaker 1>Earlier this week, I went job hunting on LinkedIn with

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<v Speaker 1>side Nayak, Bloomberg finance reporter based in Mumbai.

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<v Speaker 2>You can also experiment with other firms like say a

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<v Speaker 2>Goldman Sachs. Goldman Sachs has an opening in Hyderabad for

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<v Speaker 2>Corporate Planning and Management Vice President Software Engineering in Hyderabad.

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<v Speaker 1>Now, I am not planning a career pivot or a

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<v Speaker 1>move from New York to New Delhi. We did this

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<v Speaker 1>so CIDI could show me that jobs in India's finance

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<v Speaker 1>sector are not what they used to be. City covers

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<v Speaker 1>the big Wall Street banks, JP, Morgan, Chase, Morgan, Stanley,

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<v Speaker 1>Goldman Sachs. For years, much of the coverage of the

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<v Speaker 1>global banking industry and its white collar employees was focused

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<v Speaker 1>on the US and Europe. But City and I weren't

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<v Speaker 1>looking for jobs in New York or Paris. We were

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<v Speaker 1>looking in India, where there is a hiring frenzy.

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<v Speaker 2>Wall Street banks don't have a big presence from the

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<v Speaker 2>retail site. But if you look at the corporate side

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<v Speaker 2>as well as the investment banking side and the wealth side,

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<v Speaker 2>basically they have a huge presence. This is your JP Morgan,

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<v Speaker 2>your Barclays, your HSBC, your Deutsche Bank.

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<v Speaker 1>City is on a team of Bloomberg reporters tracking Wall

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<v Speaker 1>Street's growing reliance on Indian hubs. This is a shift

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<v Speaker 1>that's accelerated as President Trump Titan's visa requirements and as

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<v Speaker 1>India's booming wealth management industry and private credit continue to grow.

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<v Speaker 2>JP Morgan Chase is hiring credit specialists in Mangalore. Goldman

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<v Speaker 2>Sachs is hiring analysts to review loans tight to everything

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<v Speaker 2>from commercial property to yachts. So what began as low skilled,

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<v Speaker 2>call centered jobs in India have now evolved into a

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<v Speaker 2>mission critical hub of global finance and technology.

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<v Speaker 1>This is the Big Take Asia from Bloomberg News. I'm

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<v Speaker 1>David Gura in for Wanha. Every week we take you

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<v Speaker 1>inside some of the world's biggest and most powerful economies

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<v Speaker 1>and the markets, tycoons and businesses that drive this ever

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<v Speaker 1>shifting region. Today on the show, Indian based workers once

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<v Speaker 1>supported American financial services firms now they're increasingly key to

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<v Speaker 1>their operations. How India's government is encouraging Wall Street firms

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<v Speaker 1>to expand their footprint in India, and how President Trump's

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<v Speaker 1>new visa policies could speed up the push. India has

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<v Speaker 1>been a tech hub for decades. In the late nineties

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<v Speaker 1>and early two thousands, the country saw a call center boom,

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<v Speaker 1>with multinational corporations like American Express, IBM and Goldman Sachs

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<v Speaker 1>setting up Global Capability Centers or gccs and staffing them

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<v Speaker 1>with Indian workers. The goal was to provide twenty four

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<v Speaker 1>to seven low cost operational support for customers in the US.

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<v Speaker 1>Here's Bloomberg City Nayak.

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<v Speaker 2>These firms operations in India were largely to address grievances

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<v Speaker 2>of customers or initiate sales through phone calls. So, for example,

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<v Speaker 2>if you're a client based in US and had grievances

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<v Speaker 2>related to insurance, the chances were that Indians had these

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<v Speaker 2>call centers would answer these calls and help address these concerns.

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<v Speaker 1>But that has changed dramatically over the last decade. Take

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<v Speaker 1>Goldman Sacks as an example. In two thousand and four,

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<v Speaker 1>its office in the southern city of Bangalore had three

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<v Speaker 1>hundred employees, most of whom focused on tech and IT support.

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<v Speaker 1>Today that same office is home to more than eight

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<v Speaker 1>thousand employees. Those workers do everything from core financial analysis

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<v Speaker 1>to risk management, the kind of jobs that used to

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<v Speaker 1>be done in US cities.

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<v Speaker 2>The perception that Indian gccs are providing call center jobs

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<v Speaker 2>is kind of changing. Gccs that are now offshow centers

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<v Speaker 2>established by these multinational cooperations or financial services firms now

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<v Speaker 2>deliver high quality, cost effective services and support their global operations.

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<v Speaker 2>Call center jobs are now being outsourced to other emerging

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<v Speaker 2>economies like Philippines. Property prices also are cheap because the

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<v Speaker 2>value of rupee is depreciating visa either dollar.

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<v Speaker 1>So it sounds like there is quite a boom here.

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<v Speaker 1>How far along are we?

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<v Speaker 2>Financial services firms? Banks have a significant employee base in India.

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<v Speaker 2>The top six US banks in India, that is JP, Morgan,

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<v Speaker 2>Bank of America, Goldman, Sachs City, etc. Employ about one

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<v Speaker 2>fifty thousand people in India. We know that Goldman, SAX

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<v Speaker 2>and Morgan Stanley have more staff in India than anywhere

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<v Speaker 2>outside the US. What we understand from sources is that

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<v Speaker 2>one European bank concluded that a catastrophe in India such

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<v Speaker 2>as an earthquake, would disrupt its activities more than a

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<v Speaker 2>similar disaster at its headquarters.

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<v Speaker 1>Is this going to be a bigger magnet? Do you

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<v Speaker 1>think in the years ahead it.

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<v Speaker 3>Is going to be a bigger magnet.

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<v Speaker 2>Because most of these colleges as well as tech centers

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<v Speaker 2>are churning out low cost talent on a large scale,

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<v Speaker 2>there will be more opportunities for formal and informal workers.

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<v Speaker 2>This is because there is no dearth of talent from

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<v Speaker 2>the tech side in India. There's always a lot of

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<v Speaker 2>graduates every year that get pulled up into these roles,

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<v Speaker 2>which is why we can see the boom expecting to

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<v Speaker 2>continue and most of these firms trying to leverage on

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<v Speaker 2>the talent that is built in India.

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<v Speaker 1>According to estimates from the National Association of Software and

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<v Speaker 1>Service Companies and consulting firm Zenov, employment at gccs in

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<v Speaker 1>India is projected to jump fifty percent to as many

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<v Speaker 1>as two point eight million people by twenty thirty. Cdesa's

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<v Speaker 1>employees at these gccs are breaking ground too. A source

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<v Speaker 1>told Bloomberg that Black Rocks a Laddin portfolio management platform

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<v Speaker 1>was developed in India, as was Goldman's Atlas trading system.

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<v Speaker 1>Then there's Zel, the popular payment app. It was developed

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<v Speaker 1>by Arizona based Early Warning Services, but Sidi's sources told

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<v Speaker 1>her that India played a crucial role behind the scenes.

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<v Speaker 2>We have information from our sources that the technology behind

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<v Speaker 2>running this zell app was entirely built out of India

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<v Speaker 2>through Bank of America, Goldman Sachs gccs in Bangalore and Hyderabad.

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<v Speaker 2>This was kind of inspired by the fintech revolution in India.

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<v Speaker 2>We have a UPI Unified Payment Interface system in India

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<v Speaker 2>where there is a bank to bank transfer of payment

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<v Speaker 2>systems using a QR code. So most of these inspirations

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<v Speaker 2>were kind of instrumental in making or building the Zell app.

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<v Speaker 1>Could you situate this in kind of the broader Indian economy?

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<v Speaker 1>How important it is that the growth of these gccs

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<v Speaker 1>the importance of Wall Street's interest in putting some of

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<v Speaker 1>these higher skill jobs in India.

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<v Speaker 2>So gccs are a vital component of the Wall Street

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<v Speaker 2>firm's global strategies as well as for India's economic growth.

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<v Speaker 2>They are fostering job creation, skill development, and foreign investment

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<v Speaker 2>in India that is in turn getting fed into India's

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<v Speaker 2>GDP growth. Their revenue is expected to search to one

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<v Speaker 2>hundred and five billion dollars from about forty point four

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<v Speaker 2>billion dollars in FY nineteen, according to na Scom and

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<v Speaker 2>Zenov estimates. So this is the kind of impact that

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<v Speaker 2>we are talking about. Their growth in India is not

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<v Speaker 2>just important for fueling economic growth, job creation, but also

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<v Speaker 2>to get a lot of foreign influ in terms of

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<v Speaker 2>foreign direct investments in India.

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<v Speaker 1>This year, US immigration policy through a ranch in India's

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<v Speaker 1>workforce overseas, but it also became a boon for their

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<v Speaker 1>domestic gccs. How that's after the break In late September,

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<v Speaker 1>President Trump announced it change to US immigration policy with

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<v Speaker 1>a big price tag, a one hundred thousand dollars fee

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<v Speaker 1>for an H one B visa application.

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<v Speaker 4>The country would rather not have to pay one hundred

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<v Speaker 4>thousand dollars, but rather, how do you do that? You

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<v Speaker 4>hire America, So there's an incentive to hire.

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<v Speaker 1>The H one B is a non immigrant visa which

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<v Speaker 1>allows US employers to temporarily hire foreign workers in highly

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<v Speaker 1>skilled roles engineering, technology, medicine. When Trump made the announcement,

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<v Speaker 1>the US's financial sector found itself relatively unprepared, as Bloomberg

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<v Speaker 1>City nayak So.

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<v Speaker 2>Indians make up roughly seventy percent of H one B holders.

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<v Speaker 2>When Trump first announced one hundred thousand dollar visa fee,

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<v Speaker 2>it was seen as a big blow for Indians.

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<v Speaker 3>We had JP Morgan.

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<v Speaker 2>CEO Jamie Dimmons say that the announcement caught everybody off guard.

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<v Speaker 2>Apart from that, we had HSBC stating that the new

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<v Speaker 2>one hundred thousand, h one B dollar fee in the

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<v Speaker 2>US was manageable due to their relatively low number of

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<v Speaker 2>foreign workers compared to other firms.

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<v Speaker 1>JP Morgan, APAX CEO and head of Banking Short Leanard

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<v Speaker 1>joined Bloomberg TV's Menkadoshe shortly after Trump's announcement and expanded

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<v Speaker 1>on the company's disappointment that how this would impact India's

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<v Speaker 1>younger workforce.

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<v Speaker 3>So, will JP Morgan be moving more jobs to your

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<v Speaker 3>GCC here.

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<v Speaker 4>Yeah, well that's a very good question, and if it was,

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<v Speaker 4>it would be a shame because it obviously has been

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<v Speaker 4>a great source of opportunity for Indian students. You know,

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<v Speaker 4>India producer's two point eight million STEM students every year

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<v Speaker 4>and they've gone all over the world, including.

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<v Speaker 1>In a statement to Bloomberg. A White House spokeswoman said

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<v Speaker 1>changes to the H one B visa program were necessary

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<v Speaker 1>to put America first. She said the bank's efforts to

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<v Speaker 1>move jobs overseas is quote evidence that they were using

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<v Speaker 1>foreign workers to undercut Americans wages. Though it is a change,

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<v Speaker 1>it's not like the rug had gotten pulled down from

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<v Speaker 1>under India's financial industry City says the Indian economy was

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<v Speaker 1>expanding and the upper class was growing in this.

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<v Speaker 3>In the middle of a wealth broom.

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<v Speaker 2>The boom had already started post COVID, and Trump's announcement

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<v Speaker 2>of the visa fee kind of gotten in for these firms,

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<v Speaker 2>like an incentive to hire more talent inward. Banks that

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<v Speaker 2>might consider transferring a worker to the US may now

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<v Speaker 2>be opened to hire them in India itself.

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<v Speaker 1>An H one B visa used to cost on average,

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<v Speaker 1>around five thousand dollars. JP Morgan is among the top

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<v Speaker 1>ten companies in the US that sponsors the most H

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<v Speaker 1>one B visas. City says the new visa fee has

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<v Speaker 1>sparked some chatter among the banks.

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<v Speaker 2>Some of the Wall Street banks in India were looking

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<v Speaker 2>to talk to their counterparts in the US to talk

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<v Speaker 2>to them about opening more roles in India specialist roles

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<v Speaker 2>in India to kind of not be impacted by the

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<v Speaker 2>higher he B dollar fee.

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<v Speaker 1>Then there's the math involved in hiring people in India

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<v Speaker 1>versus in a US city.

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<v Speaker 2>Firms know that the salary of an Indian tech engineer

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<v Speaker 2>is much less than what it is in the US

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<v Speaker 2>for an entry level role at a US bank's GCC,

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<v Speaker 2>and engineering graduate in India could earn anything between say

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<v Speaker 2>three hundred thousand rupees to eight hundred thousand rupees a

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<v Speaker 2>year depending on the location.

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<v Speaker 1>That's between four and ten thousand dollars per employee.

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<v Speaker 2>That compass with a sixty thousand dollars annual fee for

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<v Speaker 2>an Indian on a US visa and up to one

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<v Speaker 2>twenty thousand dollars for a US citizen in the same role.

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<v Speaker 1>So he says, these calculations are driving banks to think

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<v Speaker 1>differently about the way they balance staffing in their offices

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<v Speaker 1>in the US and in India.

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<v Speaker 2>This has actually accelerated the pivot to India Wall Street

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<v Speaker 2>banks for hiring anyway, this fee is just a push

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<v Speaker 2>potentially bringing more jobs to India. So recruitment firms have

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<v Speaker 2>told us that with the new fee, workers have started

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<v Speaker 2>to question if a US job is a priority for

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<v Speaker 2>or most of the employees, as well as the employers.

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<v Speaker 2>Firms have also realized that this is not going to

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<v Speaker 2>be cost effective and India, which was already seeing a

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<v Speaker 2>GCC boom, would now benefit from this.

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<v Speaker 1>Trump said the higher H ONEB VISA application fee is

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<v Speaker 1>to address quote abuse of the program and to compel

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<v Speaker 1>US companies to hire Americans, but cities reporting shows it

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<v Speaker 1>could backfire and hurt the US instead.

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<v Speaker 2>Senior executives from at least two US banks in India

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<v Speaker 2>are in talks to consider ways to ramp up their

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<v Speaker 2>global capability centers in India. This is in response to

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<v Speaker 2>the H ONEB VISA crackdown. According to sources, some global

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<v Speaker 2>lenders that had extended offer letters for positions in the

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<v Speaker 2>US are also looking to either revoke them or create

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<v Speaker 2>alternative roles at these gccs.

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<v Speaker 1>That's bad news for the US job market potentially, but

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<v Speaker 1>it could be great news for India.

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<v Speaker 2>If these jobs are coming to India, it is a

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<v Speaker 2>boom for the job market. A tech engineer or a

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<v Speaker 2>tech specialist who has just graduated has more options on

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<v Speaker 2>the table. He has the option of getting into a

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<v Speaker 2>startup a GCC of fintech firms. The role is being

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<v Speaker 2>elevated in the sense that he has to do more

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<v Speaker 2>jobs that involve research, legal development, specializing, getting into certain

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<v Speaker 2>spaces that only high skill talent can tap into. That

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<v Speaker 2>is the kind of opportunity boom in gccs has provided

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<v Speaker 2>the tech talent. At the same time, if these firms

0:14:44.680 --> 0:14:49.440
<v Speaker 2>are getting huge real estate spaces in India, they do

0:14:49.600 --> 0:14:53.400
<v Speaker 2>require informal jobs as well, and that's kind of being

0:14:53.440 --> 0:14:57.000
<v Speaker 2>a boon for the entire Indian job market.

0:15:00.040 --> 0:15:02.480
<v Speaker 1>So the says the government has seen an opportunity and

0:15:02.640 --> 0:15:05.120
<v Speaker 1>is working on a set of policies to incentivize the

0:15:05.160 --> 0:15:09.400
<v Speaker 1>financial sector designed to help the GCC ecosystem thrive.

0:15:10.080 --> 0:15:14.640
<v Speaker 2>India announces its federal budget on the first of February

0:15:14.960 --> 0:15:19.320
<v Speaker 2>every year. This is kind of a broad layout that

0:15:19.440 --> 0:15:25.720
<v Speaker 2>the government has on revenues, taxations, incentives, etc. From our sources,

0:15:25.760 --> 0:15:29.600
<v Speaker 2>we have found out that there is a GCC policy

0:15:30.480 --> 0:15:33.600
<v Speaker 2>framework that's going to be in the making so that

0:15:33.960 --> 0:15:38.760
<v Speaker 2>more US firms or more foreign firms are encouraged and

0:15:38.920 --> 0:15:44.760
<v Speaker 2>incentivized to build more GCC hubs here. These banks employ

0:15:45.000 --> 0:15:49.720
<v Speaker 2>a huge workforce in India. Foreign firms bring in a

0:15:49.760 --> 0:15:53.800
<v Speaker 2>lot of capital for the long term. These are strategic

0:15:53.960 --> 0:15:58.600
<v Speaker 2>investments made for a fifteen to twenty year horizon, which

0:15:58.640 --> 0:16:03.000
<v Speaker 2>is why the government wants to incentivize these firms to

0:16:03.120 --> 0:16:07.960
<v Speaker 2>build more operations in India, set up more offices, employ

0:16:08.160 --> 0:16:12.200
<v Speaker 2>more workers, and kind of steer the job market.

0:16:15.120 --> 0:16:17.280
<v Speaker 1>So they says, it'll be a while before we see

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<v Speaker 1>how this pans out in India and in the US.

0:16:20.280 --> 0:16:24.520
<v Speaker 1>As banks recalibrate their global hiring strategies. One thing banks

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<v Speaker 1>are watching and something that's holding them back from expanding

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<v Speaker 1>too aggressively is how Trump could retaliate.

0:16:30.480 --> 0:16:32.960
<v Speaker 2>So US firms are walking a fine line as then

0:16:33.000 --> 0:16:36.800
<v Speaker 2>look to shift more of these roles to India. There

0:16:36.840 --> 0:16:40.160
<v Speaker 2>is a risk that there could be a backlash from

0:16:40.200 --> 0:16:42.560
<v Speaker 2>Trump and Trump could.

0:16:42.360 --> 0:16:44.440
<v Speaker 3>Now target GCC's next.

0:16:44.960 --> 0:16:49.240
<v Speaker 2>It could bring GCC's in Trump's crosshairs. When we spoke

0:16:49.320 --> 0:16:53.880
<v Speaker 2>to our sources, we found that these banks were considering

0:16:54.680 --> 0:17:00.600
<v Speaker 2>Trump's imposition of tariffs or sanctions on GCC sees as

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<v Speaker 2>a major risk to their operations. They said that most

0:17:04.640 --> 0:17:08.560
<v Speaker 2>of these banks and their US headquarters were talking to

0:17:08.720 --> 0:17:12.160
<v Speaker 2>Trump about the issues and the fact that they were

0:17:12.320 --> 0:17:17.119
<v Speaker 2>hiring a lot of people in India, so any impact

0:17:17.400 --> 0:17:21.400
<v Speaker 2>of the government's orders would directly be felt on these.

0:17:21.240 --> 0:17:22.800
<v Speaker 3>Banks operations as well.

0:17:23.280 --> 0:17:30.920
<v Speaker 2>But that is a story for another day.

0:17:33.080 --> 0:17:35.320
<v Speaker 1>This is The Big Take Asia from Bloomberg News. I'm

0:17:35.359 --> 0:17:37.439
<v Speaker 1>David Gera. To get more from The Big Take and

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<v Speaker 1>unlimited access to all of Bloomberg dot com, subscribe today

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<v Speaker 1>at Bloomberg dot com slash podcast Offer. If you liked

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<v Speaker 1>Take Asia wherever you listen to podcasts. It helps people

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<v Speaker 1>find the show. Thanks for listening, See you next time.