FT : Goldman Staff Numbers In India Soar

Bangalore will soon surpass Tokyo as Goldman Sachs’s third largest office by head count, according to executives at the investment bank.  The shift underscores the pressure on securities firms to trim compensation costs, and the surging talent pool in India capable of performing everything from information technology support to sophisticated analytic research.  Goldman’s Bangalore office employs close to 1,200 and is on track to soon overtake Tokyo, which employs 1,500, according to Goldman officials.  That would make Bangalore Goldman’s third largest office by head count behind New York and London.  Goldman’s Bangalore staff includes software designers, transaction processing staff and, increasingly, highly skilled analysts who produce modelling and other data that appear in Goldman research reports.  Goldman executives say the Bangalore staff has been fully integrated into the bank’s operations and produces work on a par with that generated anywhere in the world. 

The Bangalore workers are all full-time Goldman employees, something the bank says helps ensure quality.  Some securities firms have chosen to outsource research and other functions to third-party providers.  Goldman, of course, is far from alone in building up staff in India.  JPMorgan Chase has about 6,000 employees there and may add more, reflecting its larger size and retail operations.  Morgan Stanley, Merrill Lynch and others also have growing operations in India.  The relative size of Goldman’s Bangalore office compared to the rest of the bank reflects the rapidity with which securities firms are shifting increasingly sophisticated functions to cities such as Bangalore where salaries, while growing, are still far below those in Europe and the US.  Alok Aggarwal, chairman of Evalueserve, a corporate research outsourcing group, said Wall Street firms must now pay their skilled Indian employees about $20 to $23 per hour, compared to closer to $100 per hour for junior staff in the US.  “There is upward pressure on wages [in India] but it is not such a big deal when you think of the base you were starting from,” he said.  Mr Aggarwal said a bigger problem for Wall Street firms was the 25% attrition rate among a still limited pool of highly educated and heavily recruited Indian workers.  Mr Aggarwal said the number of Indians working as research analysts for securities firms grew by 60% last year, rising from 800 in 2005 to 1,300 this year.

Reference : http://www.ft.com/cms/s/fa5b4ce8-4732-11db-83df-0000779e2340.html