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