Downturn in stockbroking business - 2001

SALARIESD-street Blues
They're not cutting jobs, but most brokerages are asking their people to work for less.

There simply isn't enough work on the street. On September 8, 2000, when the market was on a roll, average daily-trading volumes on the Bombay Stock Exchange were as high as Rs 4,628 crore; by September 8, 2001, this figure had shrunk to Rs 3,198 crore. And with most stocks trading near all-time lows (or a little better than that), analysts aren't really sought after by anyone other than the bored scribe looking for a hot story.
As members of an industry-segment, that's usually shown itself to be trigger-happy when it comes to laying people off (remember the original bloodbath in the financial sector a few years ago, when companies mercilessly haced numbers?), the response of brokerages has been uncharacteristic: less pay, and not just in terms of slimmer bonuses.

There isn't an analyst in India today who can hope to take home a 2001-bonus that's as high as the 2000-one. Rues one analyst at Prabhudas Lilladhar: ''Not only can we expect to get a smaller bonus, our salary has been cut substantially.''

There hasn't been a wage-cut at Kotak Securities, at least, not yet, but CEO S.A. Narayan warns of a bonus that could be 25 to 30 per cent lower than last year's one . ''When the markets are down, we are the first to be hit. We are in the frontline''
The industry is also making a large-scale shift to compensation packages with a high variable-pay component. ''We are not reducing salaries,'' explains Motilal Oswal, Chairman, Motilal Oswal Securities, ''but earlier we used to have (a compensation structure built around), 100 per cent fixed pay; now, in some cases 100 per cent is variable''.

In good times, such changes would have provoked employees to look for better prospects, but now, there simply are none. Moans an analyst who who's just taken a 20 per cent cut in pay: ''I've looked for jobs everywhere; there are none going.''
Actually, there are some jobs going in the insurance business, but with most finance pros making a beeline for them, the competition is intense and supply far exceeds demand.
Some people, like Sunit Mehra, the Managing Partner of executive search firm Horton, believe there is nothing surprising about the correction in salaries. ''In the past five years, salaries in several industry segments in India, particularly financial services, had gone up way too high; a correction was imminent.'' Well, if this is just a correction that's happening, it couldn't have found a worse time to happen. [http://indiatodaygroup.com/btoday/20010930/trends2.html, 8/9/2007]