When US financial giants JP Morgan and Lehman Brothers started operations in India in 2005-06, they poached executives from Indian companies for exorbitant salaries. With Bear Stearns and Lehman collapsing, salaries in financial sector are heading for a major fall.
While pay packets could be lower by 20 per cent, variable pay could be halved, feel industry insiders and HR experts. US majors offer 50-60 per cent rise in salaries than their Indian counterparts.
“Only the Shah Rukh Khans of the investment banking industry would now be able to retain their salaries,” said the CEO of a large multinational who declined to speak on record.
Industry insiders feel that there could be flight of talent from multinational companies to domestic financial majors.
Employee stock options and a relatively stable ambience make domestic companies attractive than their MNC peers.
“I have been with ANZ for a very long time. Now I have moved to Future Capital. The salary here is low compared to my former organisation. But there is stability here,” said a mid-level executive with Future Capital who did not want to be identified.
Industry insiders are expecting a 50 to 60 per cent cut in variable pay, or perks and bonuses. Deal-based bonuses, that were the mainstay of investment banking and institutional brokerage services, would suffer, according to investment banking sources who does not wish to be identified.
“The short term is bad. The medium term is bad. The long term would be stable,” said Shyam Shenthar, who left a large investment advisory and started his own boutique investment bank, O3 Capital.
The misery does not end there. Most Wall Street banks had a large number of Indian origin employees. While they would want to come back in a worst-case scenario, many of them have skills that are only relevant in the US, and make them unemployable here, said the Country head of a multinational insurance major.