Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence, the podcast
Speaker 1: that pulls back the curtain on global business so you
Speaker 1: can invest better across the Asia Pacific rim. I'm John
Speaker 1: Lee calling in from Singapore and welcome Ishika, Asia stocks
Speaker 1: reporter for Bloomberg News, who is filling in for our
Speaker 1: regular co host Tom Corbett. Welcome to Asia Centric, Ishika.
Speaker 2: Thanks John, So let's stop India. Ambitious finance professionals have
Speaker 2: never had it so good there while the international compatriots
Speaker 2: are facing job cuts and curtailed bonuses, especially in China.
Speaker 2: For them, it's boom time.
Speaker 1: The employment market is so strong that stories abound of
Speaker 1: multi million dollar trading jobs and private bankers demanding fifty
Speaker 1: percent pay hikes or more just to move firms.
Speaker 2: So is India's moment really here? And what could go wrong?
Speaker 3: Here?
Speaker 1: To discuss India's scramble for talent is a Nil Shama,
Speaker 1: managing partner of apak At executive search firm Options Group,
Speaker 1: calling in from Mumbai, India. Welcome and Neil.
Speaker 3: Hi John Hi, Ashika, thanks a lot for inviting me
Speaker 3: and Neil.
Speaker 1: There's a lot of news about how Wall Street banks
Speaker 1: trading firms are scrambling to hire talent in India. Is
Speaker 1: there really a hiring binge going on over there?
Speaker 3: Yes. I think the whole environment and the focus on
Speaker 3: the India on shore trading bits started just pre COVID.
Speaker 3: We started seeing interest coming in from bulsh bracket trading
Speaker 3: firms looking at setting up on shore operations in India,
Speaker 3: but COVID sort of pushed it back by a year
Speaker 3: or two. What for last three or four years, you know,
Speaker 3: we're seeing host of firms sort of coming in trying
Speaker 3: to set up on shore presence, you know, setting up
Speaker 3: trading Dean Systematic Traders last year year and a half,
Speaker 3: trying to sort of now build up more depth and
Speaker 3: the talent desk on ground by hiring qrs QT. So, yes,
Speaker 3: the war of talent is clearly on.
Speaker 1: Yeah.
Speaker 2: We've also seen a lot of private banks who had
Speaker 2: left in the mid twenty tens, right, such as UBS
Speaker 2: or HSBC and even Blackrock on the asset management side,
Speaker 2: they're coming back to India now. And the private bankers
Speaker 2: apparently are being able to charge up to fifty percent
Speaker 2: to move firms, and if they move with AUM then
Speaker 2: they can charge apparently eighteen to twenty percent of their
Speaker 2: fee is what are you hearing on the private banking side.
Speaker 3: Yes, private banking space in fact has been very hot
Speaker 3: for the last seven eight years. Is just that now
Speaker 3: in last two or three years we are seeing that
Speaker 3: the large pulsh bracket international ones have started to sort
Speaker 3: of double down and look at building onshore teams. This
Speaker 3: is one business where we have seen that talent is
Speaker 3: very rare to find and they can very much demand
Speaker 3: their price in terms of when they're looking at moving out.
Speaker 3: So of course, you know, when they're looking to move out,
Speaker 3: a lot of other factors come into play the platform,
Speaker 3: what their offerings are, you know, how deep their product
Speaker 3: suite looks like. But there is in no shape in
Speaker 3: form you know, if there is somebody out there with
Speaker 3: a good book, there is there's a clear market for
Speaker 3: that talent. So it's not a headcount driven market today.
Speaker 3: I would say it's a very talent driven market. So
Speaker 3: talent is driving the whole movement skill in the space.
Speaker 1: So neil is that the hot sector private banking? What
Speaker 1: about investment banking, asset management trading.
Speaker 3: Across the whole spectrum? I would say the buy side,
Speaker 3: you know, so asset management last five or six years,
Speaker 3: if you could have seen the AUMs for most of
Speaker 3: the large asset management long only as management companies on
Speaker 3: shore has swelled up. Clearly there is a high interest
Speaker 3: when you're looking at bulge bracket asset management firms, you
Speaker 3: know they're forming joint ventures on shore head in India.
Speaker 3: We're seeing interest on that lines. You know, clearly there
Speaker 3: is interest towards the direct access to the Indian markets
Speaker 3: and from the both sides, right you know, it's not
Speaker 3: only happening from the onshore talent side of it, but
Speaker 3: also the NRI business which also we are seeing headcounts
Speaker 3: going up. So clearly the high interest on talent on
Speaker 3: that front.
Speaker 2: Two, speaking of asset management, so India's stock market has
Speaker 2: more than doubled in the last five years and it
Speaker 2: briefly overtook Hong Kong as the fourth largest in the
Speaker 2: world by market gap of over four trillion US dollars.
Speaker 2: Is that what's driving this big optimism on India.
Speaker 3: Yes, I think the maturity in the ecosystem has started
Speaker 3: to come in. So there is a financial asset last
Speaker 3: is being looked up more seriously by the high net
Speaker 3: worth individuals. You know, disposable income as it's growing in
Speaker 3: the country, you know, as the GDP of the countries increasing,
Speaker 3: per capita income of the countries increasing, especially in the
Speaker 3: urban tier one PA two cities. There is clearly high
Speaker 3: interest which is there in the financial assets, which is
Speaker 3: driving a large part of growth in that segment.
Speaker 2: And you also had, like in the past, the currency
Speaker 2: controls are very strong. But the government setting up the
Speaker 2: likes of Gift City in Gujrat, which is I think
Speaker 2: it has no restrictions on currency controls if I'm not wrong,
Speaker 2: So that is helping in a big way, right your
Speaker 2: JP Morgan and Barclays have set up officers there.
Speaker 3: Yes, it's not only them, even the buy set firms,
Speaker 3: you know, the global hedge funds, you know, they are
Speaker 3: also looking at setting up on shore operations. Indian large
Speaker 3: proper trating firms is also set up their platforms over there.
Speaker 3: I think in some shape and form, the regulators or
Speaker 3: the political ecosystem is trying to sort of enable and
Speaker 3: compete with the markets like Tobay, you know, so where
Speaker 3: excess and moving off capital is a little bit more smoother, clearly,
Speaker 3: so Gift City is one which is coming up as
Speaker 3: a great place in terms of providing more opportunities for
Speaker 3: ease of business. But the challenge in Gift City remains
Speaker 3: around talent. You know, access to talent, depth of talent
Speaker 3: in that particular market, which is not there as yet.
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Speaker 1: what you hear, don't forget to subscribe and chirm. I
Speaker 1: have to ask the question that a lot of people
Speaker 1: are waiting for Ishika. You did write in one of
Speaker 1: your notes that top traders in India can now make
Speaker 1: more than one million dollars a year. Who is offering
Speaker 1: these packages?
Speaker 2: Yeah, I'm sure Andil would love to answer that question,
Speaker 2: but he can't because of his rule, so I speak
Speaker 2: in his stone instead. So basically, you have these market
Speaker 2: making firms, international firms such as your Optimers of the
Speaker 2: World or your IMC Trading Tower Capital. Some of them
Speaker 2: have been established in India, have had a presence in
Speaker 2: India for many years now, but you're seeing a new
Speaker 2: wave of market makers coming to India now because of
Speaker 2: the big buzz around its options market. India has the
Speaker 2: biggest options market in the world by the number of
Speaker 2: contracts traded, beating even the US. And they've really come
Speaker 2: here to make their money, right, to find a new
Speaker 2: place to generate profits. So you're seeing the heads of
Speaker 2: the algo trading desks. When they're really good, they're bringing
Speaker 2: in exceptional amounts of revenues. They're getting one million dollars
Speaker 2: annually in pay.
Speaker 3: Just to add to that Uni surprise. Actually, though the
Speaker 3: international firms are looking at paying out that big box,
Speaker 3: it's the domestic firms which are driving the force in
Speaker 3: that matter, because most of the domestic firms in that space,
Speaker 3: the names that you mentioned, are trying to come in
Speaker 3: and build on the market share. So large part of
Speaker 3: these platforms provide aggressive profit sharing models and their technology
Speaker 3: is as good as any. They payout to an employee
Speaker 3: in many cases we have seen goes into multimillion dollars,
Speaker 3: and to be honest, you know, most of these international
Speaker 3: firms struggled to compete with that because unfortunately, in the
Speaker 3: way most of the international firms law structure, they cannot
Speaker 3: provide the p and L or profit sharing models, most
Speaker 3: of them because they've become part of a growth player.
Speaker 3: There's no direct linkages to the p and L, which
Speaker 3: is where the domestic firms are still holding the cards.
Speaker 1: That's an interesting comment because Ishika, there is a famous
Speaker 1: court battle going on between two of the world's largest
Speaker 1: trading firms, that's Jane Street and Millennium. Can you give
Speaker 1: us some background and why India is so important to
Speaker 1: this court case.
Speaker 2: Yeah, absolutely so. Suddenly in mid April, I think it
Speaker 2: happened over a weekend that Jane Street filed a court
Speaker 2: case in Manhattan against two traders who work for Millennium
Speaker 2: and for US. It was a big surprise because as
Speaker 2: the court proceedings were going on, it was inadvertently revealed
Speaker 2: that the whole case was about this options trading strategy
Speaker 2: in India that one Jane Street about a billion dollars
Speaker 2: last year. And apparently these two traders allegedly when they
Speaker 2: went over to Millennium, they employed the same strategy and
Speaker 2: but half Jane Streets profits in India. Now one billion
Speaker 2: dollars is a big number for Jane Street. It brought
Speaker 2: in net revenue of ten billion dollars last year. That's
Speaker 2: a tenth of its revenue and now apparently millennium the
Speaker 2: traders are saying that, you know, there's nothing very proprietary
Speaker 2: about this, and it's not some big secret sauce that
Speaker 2: they've employed. It's a very simple option strategy. From the
Speaker 2: reporting that I've done, it seems like these traders have
Speaker 2: been employing shot volatility strategies in India, not very complex ones,
Speaker 2: just simple ones. And it seems like it's really not
Speaker 2: not a big deal. But yes, it has eaten into
Speaker 2: Jane Streets profits quite a bit.
Speaker 1: And look, this is the top of the cream of finance.
Speaker 1: You know that the trade is at these trading firms.
Speaker 1: But let's just take a step down. What about investment
Speaker 1: bankers private bankers? Can they really demand like a fifty
Speaker 1: percent pay increase by switching firms?
Speaker 3: See in investment banking space, if I jump in on this,
Speaker 3: when they're moving jobs, the numbers are going up that aggressive.
Speaker 3: It's very similar to you know, how the talent market
Speaker 3: is in most of the developed markets. In investment bank
Speaker 3: if you look at it specifically, you know the banks
Speaker 3: are on journey of juniorization of resources across the board.
Speaker 3: The MD headcounts are more and more tougher to come by.
Speaker 3: But again there are sectors like tech pharma which are
Speaker 3: of very high interests and m ANDE bankers with good
Speaker 3: coverage on FSG capital markets are on high demand. But
Speaker 3: what we have seen in the last couple of years,
Speaker 3: especially last eight to ten months, when the whole balant
Speaker 3: space in the investment banking area has sort of heated up,
Speaker 3: the movements have gone up, but necessarily not from the
Speaker 3: comp perspective. We are not seeing those thirty percent forty
Speaker 3: percent uptick in compensation in that particular space, you know.
Speaker 3: So of course there will be one odd outline example
Speaker 3: on that, but generally we'll see flat to ten twenty
Speaker 3: percent premium on compositions in that space. And again I'm
Speaker 3: more talking about ds and mds, you know, but when
Speaker 3: you come mid and junior fifteen thirty percent is a
Speaker 3: normal no onn talent movement in banking.
Speaker 1: Yeah. One of our colleagues, Sarah Jane Muhmmud of Bloomberg Intelligence,
Speaker 1: recently wrote a report. I think she was citing Michael Page,
Speaker 1: but she was mentioning that investment bankers in Mumbai actually
Speaker 1: make more money than in Hong Kong and Singapore. I
Speaker 1: found that very surprising. Do you get that sense, Anil?
Speaker 3: Yes, yes, very much. You have to look at into
Speaker 3: the put these things into a context. Right today, when
Speaker 3: you look at investment banking revenues, for few of the
Speaker 3: bulsh bracket banks, a good number of them have in
Speaker 3: twenty twenty three had a good forty to fifty percent
Speaker 3: of their apacker revenues coming in from India. When you
Speaker 3: put that thing in perspective, most of the investment banks
Speaker 3: do operate in some loose outlines and percentage of you know,
Speaker 3: so based on that purely from mats, you know, the
Speaker 3: numbers do look aggressive. It's just that I won't say
Speaker 3: that the comp numbers in India would have gone up
Speaker 3: prastically high. Is just that the average comp across the
Speaker 3: region has come down, you know, so where there's a
Speaker 3: good meeting point which is happening. Yeah, So I hope
Speaker 3: that answers your question.
Speaker 2: What about the fixed income space, because sovereign bonds of
Speaker 2: India are set to get included in JP Morgan's bond indexes,
Speaker 2: even Bloombergs for that matter, are you seeing excitement in
Speaker 2: the fixed income trading space as well?
Speaker 3: Yes and no both. Yes. From the perspective is that
Speaker 3: large part of India markets and the way it's structured
Speaker 3: is very flow centric. You know, proptests are not that
Speaker 3: deep in i fice CE disk across the board, given
Speaker 3: the regulations, how they operate and when you look at
Speaker 3: flow business, so you necessarily do not see the comp
Speaker 3: numbers being do fluctuating, you know, based on year and
Speaker 3: year out because you're normally managing clients money. But yeah,
Speaker 3: so few banks which have aggressive prop tests, we do
Speaker 3: see heavy payouts and a few of the non banks
Speaker 3: who are operating in FICC space actually the comp numbers
Speaker 3: are far more aggressive than the commercial banks in India.
Speaker 3: It's an interesting space. If you would have seen five, six,
Speaker 3: seven years back, a whole bunch of investment banks started
Speaker 3: to apply for bank licenses because on shore you actually
Speaker 3: can't trade as an entity on ground if you do
Speaker 3: not have a commercial bank license, you're restricted to trade
Speaker 3: the FX you know, which some libertations have been opened up.
Speaker 3: So there was another vehicle which was the primary dealership
Speaker 3: through which few of the institutions were trading on ground.
Speaker 3: Seven bonds, you know, through that particular license, but there
Speaker 3: are only two or three of those, and maybe it's
Speaker 3: only one which makes serious money, and their pay scales
Speaker 3: are very high. For the last few years, we have
Speaker 3: seen the other du also trying to sort of scale
Speaker 3: their operations up, but they have struggled, you know, to
Speaker 3: get approvals and sort of get things running. The talent
Speaker 3: space is not that hot, so to say, in the
Speaker 3: FICC space, as it's in the banking and the equity space.
Speaker 1: And a neil India's gain is often portrayed as China
Speaker 1: or Hong Kong's pain. You alluded to the fact that
Speaker 1: banking revenues outside of India in other parts of Asia
Speaker 1: has come down. Do you get a sense that, say,
Speaker 1: maybe like the investment banks, the private banks, they're cutting
Speaker 1: in Hong Kong, mainland China and investing in India.
Speaker 3: It's differn from that. I think India had been a
Speaker 3: big focus market for a lot of investment banks in
Speaker 3: the last five six years. I think the political stability
Speaker 3: which the country has provided, especially in last three or
Speaker 3: four years, you know, geopolitically, how what's happening around the
Speaker 3: world with wars and everything. The political, stable ecosystem which
Speaker 3: the country has provided, and the growth oriented mindset with
Speaker 3: the current regime had. You know, it's just put us
Speaker 3: in a very good sweet spot, so to say, you know,
Speaker 3: and it's moving in the right direction. Of course, I
Speaker 3: can deny that the pain points are coming out of
Speaker 3: other countries in the region. Is creating a little bit
Speaker 3: more opportunity, but it's just not purely driven by that,
Speaker 3: you know. So the country in itself is moving in
Speaker 3: the right direction.
Speaker 2: And an ala these companies hiring locally your your private banks,
Speaker 2: investment banks, trading firms, or are they hiring from overseas
Speaker 2: because there's a huge Indian diaspora that lives and works
Speaker 2: in Singapore, New York, London the by I myself got
Speaker 2: a lot of requests on LinkedIn from traders once I
Speaker 2: put that story out and they were asking about moving
Speaker 2: to India because now they can potentially make a million
Speaker 2: dollars interesting, you know.
Speaker 3: So since Q four last year, we have seen a
Speaker 3: sudden rise in that sort of request in the jobs,
Speaker 3: you know, where we felt that the clients always wanted
Speaker 3: to have people who came with book of business, especially
Speaker 3: in the equities banking area or even in the trading
Speaker 3: space having the local expertise. But in the last two
Speaker 3: or three quarters we have seen that perspective is changing
Speaker 3: a bit. So today I have a lot of requests
Speaker 3: from clients where they want access to talent in New York,
Speaker 3: in London and more develop markets coming in with more
Speaker 3: global exposure. This is like mid two thousand era, you know,
Speaker 3: when a lot of returning Indian phenomena had started, so
Speaker 3: people who worked on Wall Street wanted to come back,
Speaker 3: and most of the large international banks built up their
Speaker 3: desks like that. And now it's like, you know, in
Speaker 3: the phase where we are entering, which is more the
Speaker 3: growth has seen more global. You know, we are getting
Speaker 3: a lot of those kinds of requests off late. But
Speaker 3: of course, you know, the talent movement was always hot,
Speaker 3: so we always had requests from clients even in the
Speaker 3: last five, seven, ten years, but that was more centered
Speaker 3: around tech, having experience on risk, those areas compliance, you know,
Speaker 3: where you wanted to look at talent, you know, which
Speaker 3: looked at business in a different scale and a developed
Speaker 3: market mindset. But now this started to sort of come
Speaker 3: back into the business side too.
Speaker 1: We've talked a lot about the positive aspects, and it's
Speaker 1: obvious been like a great time to be a recruiter
Speaker 1: in India. But what are the challenges for that finance
Speaker 1: company's face in expanding into India? What could go wrong?
Speaker 3: First and foremost, I think the firms which have not
Speaker 3: been in India for last ten years or decade taking
Speaker 3: and a half and the ones which are coming in
Speaker 3: new The whole change of mindset, you know, of localization
Speaker 3: of jobs or the job profiles is one big challenge
Speaker 3: to these space. We have always looked at India as
Speaker 3: a cost arbitrage market for last ten fifteen years, but
Speaker 3: that has changed massively, so if you look at it today,
Speaker 3: it's more about a talent arbitrage at that scale and
Speaker 3: size and depth. You know, there are very few countries
Speaker 3: which provide you that talent in the financial services and
Speaker 3: the technology space, which is again another hot space in India,
Speaker 3: but dealing with the unstructured industries, you know, when they're
Speaker 3: looking at entering indiasa I'm talking mainly about near hot
Speaker 3: space like a hedge fund or approp trading firms or
Speaker 3: the market making firms, you know, trying to understand that
Speaker 3: your global structure in a straight structure way you might
Speaker 3: not find the straight fits is one piece which we
Speaker 3: are seeing firms struggling to sort of make their way
Speaker 3: around that. That's one you know, high attrition rates. The
Speaker 3: country has always had challenges on that front. So the
Speaker 3: talent space in India is very volatile. So you will
Speaker 3: see the attation numbers across the board will hover between
Speaker 3: you know, fifteen to twenty percent many industries, which becomes
Speaker 3: a new norm for the firms which you're looking at
Speaker 3: setting up India and the firms which are in India
Speaker 3: you know for ten fifteen years. For them, the challenges
Speaker 3: are a little bit of a different kinds. It's just
Speaker 3: that the global firms, for good or bad, do not
Speaker 3: provide any opportunity of capital creation, which a lot of
Speaker 3: domestic firms do provide, which share you know, stock option
Speaker 3: plans with aggressive eltive plans, which is one reason if
Speaker 3: you would have seen in last seven eight years there's
Speaker 3: a lot of talent has moved away from global institutions
Speaker 3: into domestic institutions. Yeah, so those are the moving parts
Speaker 3: which we all are dealing with right now.
Speaker 2: I'd just like to add to that, the Indian government
Speaker 2: is taking measures to sort of stem the over exuberance
Speaker 2: and financial assets as well. It's kind of been trying
Speaker 2: to take the fraud out of IPOs in the small
Speaker 2: cap and MidCap space. In the equity market and clamp
Speaker 2: down on lending to retail investors that hasn't been as
Speaker 2: proper as it should be. So that is one of
Speaker 2: the challenges facing this huge growth in the finance sector
Speaker 2: as well.
Speaker 3: Yeah, in massive way. You know, I'm just moving away
Speaker 3: from the capital market space right now, so we do
Speaker 3: a lot of work in the consumer commercial finance space,
Speaker 3: in the consumer fintech space. For the last five six years,
Speaker 3: that's the space which has been the hottest on Crown.
Speaker 3: If you ask any investment banker, you know they wanted
Speaker 3: to go and become a CFO for a fintech fom
Speaker 3: and create a serious value for themselves. Is not there anymore,
Speaker 3: especially what we have seen the steps being taken by regulators,
Speaker 3: and again the VC space itself has slowed down massively
Speaker 3: in investing in the fintech and additional space, so those
Speaker 3: pains you can feel it. In last twelve months, activity
Speaker 3: in that space has gone down massively and now we're
Speaker 3: seeing cuts coming across the board. In that space. That's
Speaker 3: another challenge you know, which we are seeing in the
Speaker 3: financial services broadly.
Speaker 2: Yeah, I have a final question for you andil who
Speaker 2: are these traders? Where are these trading firms getting all
Speaker 2: their traders from.
Speaker 3: Yeah, you have to retain me to get that whole
Speaker 3: market data. No, but yeah, you know, so that's fun
Speaker 3: challenge with these firms are facing where this talent sits
Speaker 3: right when you look at it from the outline of it,
Speaker 3: of course, one or two international firms which have been
Speaker 3: here for ten odd years, you have that talent at
Speaker 3: the properating firms, you know, that's where the talent is
Speaker 3: sitting and any which ways you know, so that's been
Speaker 3: one hunting ground for most of the firms entering India.
Speaker 3: But beyond that, you know, there are a couple of
Speaker 3: firms again domestic firms, two or three bulk bracket large
Speaker 3: Indian firms I would say in the Indian context buls racket,
Speaker 3: which have that talent. But again that death of that
Speaker 3: talent is not that. When these firms are coming into India,
Speaker 3: you know, the struggle which happens is they then gravitate
Speaker 3: towards the banks offshore centers, which has a real good
Speaker 3: depth and talent, and they're looking at moving the talent
Speaker 3: from those banks into the front office trading jobs and
Speaker 3: that transition is not that easy to do, you know.
Speaker 3: So there are hits and misses in that because on
Speaker 3: shore NSC trading experience or the local exchange trading experience
Speaker 3: is critical for the firms, you know, when they're setting
Speaker 3: up operations on ground. But another prices we have seen
Speaker 3: a lot of these hedge funds and a lot of
Speaker 3: these prop trading firms strategies they're deployed is moving people
Speaker 3: from international offices to India. A lot of firms, which
Speaker 3: is the names which you took earlier, Ashika. A large
Speaker 3: part of their QR trading setup is from people you know,
Speaker 3: whom they have moved from the international office necessarily not
Speaker 3: Indians by ethnicity, you know, but people they have moved
Speaker 3: from international office to India. And now they've started to
Speaker 3: build the bench you know, where they're hiring people from
Speaker 3: its computer science dual degree PhDs and sort of building
Speaker 3: the talent and depth within the system.
Speaker 1: Okay, there's some hope you don't need to be Indian
Speaker 1: to get a great job in Mumbai.
Speaker 3: We are a diverse country.
Speaker 1: Our guest has been a Neil Sharma, managing partner apak
Speaker 1: at executive search firm Options Group. It's been a really
Speaker 1: fascinating discussion on India's job market. Neil, it's been a
Speaker 1: pleasure and thanks also for Ishika for joining us today.
Speaker 2: Thanks John, Thanks Nael. That was a fun discussion.
Speaker 1: I'm John Lee. This podcast was produced by Clara Chen
Speaker 1: and you've been listening to the Asia Centric podcast