Brokerage houses shy away from lateral hiring

Severe cost-cutting leads to fall in demand for graduates with work experience
M SARASWATHY
Mumbai, 19 February

LOSING CHARM
| Lateral hires are those, who have four plus years of experience and are recruited directly for senior posts | Paid ~18-25 lakh per annum in broking houses compared with ~10-13 lakh offered to management trainees

atish Sharma has every reason to be disappointed. A couple of years ago, the 27-year-old, a secondyear student of a Mumbaibased business school, quit his job with a stock broker and joined a management programme, hoping the degree would land him a plush job. However, his hopes have been dashed this year, most leading brokerage firms are shying away from recruiting experienced candidates from business schools. Sharma, as a result, has been forced to settle for opportunities outside the industry of his choice. He is among the scores of management graduates with job experience who have been forced to give up on their dreams of securing a high-paying position with a brokerage firm. No major expansion, coupled with severe cost-cutting, had led to a fall in the demand for these graduates, said human resource executives of major brokerage houses. It is going to be a difficult year for lateral hires, especially those with an experience of more than five years, as companies, including ours, have slowed in this segment, said Dhruv Desai, senior vice-president and head (human resource and leadership academy), Angel Broking. Consultants said this year, the demand for such candi-

ILLUSTRATION: AJAY MOHANTY

| Institutes have also noticed drop in lateral hiring | In such situations, experienced candidates from B-schools prefer to join in entry level positions | Students from leading institutes also ready to take a lower pay; want a stable job | Financial analysts, marketing, relationship manager and business development are the most popular posts in brokerages
Source: Industry/B Schools

dates had fallen 25-30 per cent. Brokerage firms have been trying to stay afloat by cutting costs, primarily those on employees, as the decline in stock market activity has squeezed revenues. To reduce losses, in 2010 and 2011, many firms cut jobs at junior levels. In 2012, many senior execu-

tives, too, were asked to quit. N D Sharma, chief manager (corporate relations & placements) at Mumbai-based K J Somaiya Institute of Management Studies & Research, said this year, the institute had seen a noticeable drop in lateral hiring by brokerage firms. Consultants said brokerage firms werent even filling the positions of those who were shifting jobs. While salaries of entry-level management trainees in brokerage houses are ~10-13 lakh a year, those with experience of four to five years may get ~18-25 lakh a year. Pallab Mukherji, human resources head at India Infoline, said this year, the company would focus on hiring for entry-level positions. Also, brokerage firms are

increasingly becoming choosy about the type of business schools they hire from and the number of graduates they recruit. This year, these firms primarily plan to recruit from Tier-I institutes. The scenario is in stark contrast to the period before 2007, when graduates had the upper hand in negotiations with potential employers, who were desperate to hire. Angels Desai said this year, candidates were willing to come on board for lower salaries. These students are more tilted towards learning, rather than merely looking at pay packages, he said. K J Somaiya Institute of Management Studies & Researchs Sharma said the number of recruitments per company had fallen this year. Brokerage houses have already started visiting the institutes campus to recruit for posts of business development, marketing and financial analysts. Debashis Sanyal, dean of the business school at Narsee Monjee Institute of Management Studies, said about five brokerage firms had visited the campus this year. He added there would be a marginal increase in hiring this year.

On your mark, get set...

The euphoria surrounding the launch of the new equity exchange MCX-SX has subsided as data shows market participants have stuck to the established bourses to execute their trades. The average daily trading turnover for MCX-SX in the first seven trading sessions was just ~33 lakh. A comparison with the first seven days of NSE's trading shows it too had a humble beginning with average daily turnover of ~7 crore. BSE, which was an established bourse during that period, had an average daily turnover of ~187 crore during 1994-95. Market watchers believe MCX-SX faces an uphill task, going ahead, of catching up with its counterparts. A lot will depend on whether the new incentive scheme announced by MCX-SX lures brokers and investors towards it platform.

How bourses fared in terms of trading turnover in their first week of inception
Date Nov 03, 1994 Feb 11, 2013 Nov 07, 1994 Feb 12, 2013 Nov 08, 1994 Feb 13, 2013 Nov 09, 1994 Feb 14, 2013 Nov 10, 1994 Feb 15, 2013 Nov 11, 1994 Feb 18, 2013 Nov 14, 1994 Feb 19, 2013 Turnover (~cr) 9.02 0.69 5.42 0.28 5.75 0.67 7.34 0.12 9.15 0.00 8.16 0.02 4.84 0.53 No of companies traded 136 23 85 8 96 10 92 8 93 5 84 2 94 7 NSE MCX-SX

Source: Exchanges, Sebi NOTE: Trading turnover for BSE, which was established in 1875, isn't available. However, the average daily turnover of BSE for the year 1994-95 (when NSE commenced trading) was ~187 crore Compiled by BS Research Bureau