The global meltdown is putting severe strains on India’s booming back-office industry. US investment banks have stopped recruitment and expansion in their Indian back-office operations.
JP Morgan, Lehman Brothers and Citigroup, which are bearing the brunt of the global financial turmoil, have put a freeze on fresh recruitments in Indian back-office units. "There were no fresh recruitments during the last 4-5 months," said an executive working with a leading US bank's Mumbai-based back-office operations for equity derivatives.
Lehman has decided to drop its plans for a back-office unit in Delhi. The proposed unit, designed as a support centre for market-related investment services, was scheduled to open in the last week of March. Lehman is also shutting down its mortgage capital division in India, where it employs over 100 people.
JP Morgan has closed its equity research operation in India. Now research is being coordinated from Hong Kong, according to sources close to JP Morgan. The US bank has also not been recruiting people for the last three-four months.
Citigroup is in the process of selling its Indian back-office operations, where it employs over 5,000 people. Spokespersons from Lehman Brothers, JP Morgan and Citigroup did not reply to e-mails sent on the subject.
UBS may soon stop its recruitment at its India service centre, according to sources close to UBS. The Swiss bank employs 1,750 people at its India office in Hyderabad that provides financial research, business analytics, core investment, banking operations, finance, IT Infrastructure and risk operations. A UBS spokesperson said they have not stopped recruitment in the country. “Employee recruitment continues as planned,” said a UBS spokesperson. UBS had reported $18 billion in losses while trading in mortgage securities.
Panic is spreading among the employees of back-office units. US banks are holding assurance meetings for these employees. After the news of Bear Stearns sale to JP Morgan broke out on Monday, the US office of Lehman Brothers had organised a video-conference with employees of a third-party back-office unit in Mumbai.