Financial Sector tremors and the effect on fresh graduates
The world of finance has been shaken by the bankruptcy of Lehman Brothers, the selling of Merrill Lynch, the bailing out of American International Group Inc (AIG) and the tottering of a giant like Morgan Stanley. While all this will directly affect those employed in these companies and those with business interests in these firms, it’s going to impact campus hopefuls in a big way.
Those planning to make careers in finance are quite miserable…and there are plenty of them. The last few years has seen the brightest from elite educational institutions head over to the multinational finance companies.
A survey by Evalueserve of more than 677 IIT graduates (IITians) on their career choices has shown that interest in the financial sector has grown tremendously of late.
This survey might tells us only what IIT graduates think but I think it is safe to assume that not just IIT engineers, but also management grads (and not just from the top institutes) have been eyeing the financial sector (particularly multinational firms) because of lucrative salary packages.
The survey compared the choices (of sectors) of pre 2001 batches, with that of the post 2001 batches. These are the results:
- There was a marked decline in graduates opting for Technology, Engineering and Academic sectors, with a decline of 8 percent, 5 percent and 7 percent respectively
- The Consulting and Financial Services sectors saw an increase by 2 percent and 9 percent respectively
- A small percentage of the recent batches have opted for new fields – Media and Entertainment, Sports, Literature, Rural and Non-profit sectors.
(48 percent of both batches combined felt that opportunities for entrepreneurship are ripe today and will keep growing)
Interesting to note that the Financial Services sector saw the biggest jump (9 percent) and the Academic almost the greatest slump amongst the later batches.
Disheartening that despite a lot of jobs lying vacant in academic institutions people don’t want to go there and one assumes it is because the teaching profession does not compare well monetarily with other jobs. And few people today find the idea of a job on university campus exciting or romantic or noble.
Campus placements will be hit
So the fresh graduates will not rake in the kind of moolah their predecessors did, not in finance companies anyway. It’s not just the question of some prominent recruiters not showing up on campus as their companies have gone bust. It’s also the question of a large pool of experienced talent which is now out of a job and whether finance companies (multinational or not) will prefer to hire those with a year or two of experience rather than pick up fresh graduates at exorbitant salaries.
There have been several news reports of “hearts breaking” on IIM campuses because of bleak job prospects with multinational firms in the financial sector.
At IIM, Ahmedabad, 133 out of 255 students had joined the investment banking and financial services sector last March, but now no one knows what the numbers are going to look like and no one is talking.
It’s being said that middle-rung companies who couldn’t dream of hiring IIM and IIT grads will now get the chance to do so. This is bound to have a ripple effect. A strong hierarchical system exists amongst the engineering and management colleges. Companies have always been reluctant to hire from the colleges percieved to be C-grade and now with IIM/IIT grads available to smaller companies and at lower prices, it is those from the bottom rung colleges who will feel the scarcity of jobs. As for the IIMs and the IITs, they know they aren’t going to be out of a job.
Related Reading: IT companies not happy with quality if engineering graduates
Are half our engineers not good enough?
More jobs for Indians, but not for everyone!
High salaries only for those from elite educational institutions
Who produces more engineers, the United States or India?
All posts on Higher Education
(This report by Evalueserve was sent to me by a reader, Vipul)
A wide angle view of India 
I am studying management in what you can perhaps called a “B-grade” college and I wonder how this financial crises will affect me. I will be passing out this year and hoped to join the finance sector. Now I am re-thinking my choices.
Financial sector meltdown is true, but it may not last very long. May be another 2 yrs it would be same again. In USA both democrats and Republicans and in UK the Conservatives and the Pseudo Labor (New Labor) would do what ever at their command to put them back in rail. Yes, they would be doing it at the Tax payer’s expense. After years of tax reliefs for the ‘fat cats’ and deregulation of financial market initiated by Regan and Thatcher and continued during Clinton and Bush and New Labors has resulted in the mess. Now Tax payers of USA are asked to clean up the mess. Although Lehman has gone, AIG, Fannie and Freddie are nationalized their CEO would still be getting millions of $ as severance package. Under the terms of his employment contract, Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay, retirement benefits and deferred compensation. Mr. Mudd has already taken home $12.4 million in cash compensation and stock option gains since becoming chief executive in 2004. Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million, largely because of a clause added to his employment contract in mid-July as his company’s troubles deepened. He has taken home $17.1 million in pay and stock option gains since becoming chief executive in 2003. What a Tamasha.
Strong connection of the ruling class with the wall street (for example, Henry Merritt Paulson Jr. the United States Treasury Secretary was Chairman and CEO of Goldman Sachs, Dick Cheney, VP of USA was Chairman and Chief Executive Officer of Halliburton Company) would ensure that Wall Street survives this crisis.
More over we must understand the genesis of this crisis. As Paul Kurgman has nicely summarized it into four bullet points –
1. The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.
2. These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.
3. Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.
4. Financial institutions have been trying to pay down their debt by selling assets, including those mortgage-backed securities, but this drives asset prices down and makes their financial position even worse. This vicious circle is what some call the “paradox of deleveraging.”
As we can see main reason was greed, speculation and the bonus system (where a broker’s responsibility ends after selling a product to an investor). If we see closely, it is generally the Investment Banks like Lehman, Bear Stern, Morgan are in trouble. They generally do not operate under strict regulation like commercial banks. Also in trouble insurance companies who have insured the investors who purchases exotic investment instruments from different agencies.
So in my opinion they would be brought under more control, in fact the process has started. Goldman Sachs and Morgan Stanley got approval on Sunday to become bank holding companies. Once they come under more control, the compensation package and may be bonus system would come under scrutiny. As a result people working there or joining may get more realistic compensation package. But the show would go on.
@ Nita:
I disagree with Hoku on that the recovery will be a couple of years. The sector will undergo a long overhaul process to set up more transparent models and to regain public trust. After the depression – and people are on record saying that the destruction caused then was not as widespread – it took over a decade to heal people’s trust. This is a widely held view in London’s banking community even as they put on a brave face.
As of yesterday, we have seen that Goldman Sachs and Morgan Stanley have applied to become holding banks. That could be seen as the first step in this overhaul.
India is experiencing a connectedness related epidemic. And yes, jobs will be affected but in a country like India, there is so much to do that people can’t be out of jobs for long, except by their own fecklessness. Esp IIT and IIM grads have no reason to quibble if their millions come a bit later in life. Time to bring out the enterprising spirit and get on with it. 🙂
Interesting stats… There might be an indirect effect on the PR industry too, believe it or not! 😀
Financial newspapers nowadays do not want to write about IT companies that are not listed in the Indian stock exchange or the Nasscom… Very hard for us pathetic PR folk to get coverage for start-ups..!! 😀
@ Nita
I wanted to add that if individuals aiming for i-banking jobs have the right temperament for success in those jobs, they will be, by wiring, rainmakers who do not mind long hours and are highly self-motivated. Such people will not be found sitting around or in sub-par jobs (sub-par from their perspectives).
What this ‘crisis’ will do is separate those who are keen on the sector for all the wrong reasons from those whose risk-reward propensity matches the sector’s in its old form. Which can’t be such a bad thing, can it? 🙂
Shefaly@ i agree 2 yrs is a very optimistic projection.
But I have doubt about ‘transparent models’. Can any one explain why at New York”s commodities exchange oil ended the day with a rise of $16.37? Speculation can’t be transparent.
Also remember Bush administration wants the 700$ bail out package to be ‘clean’. Outside the preview of Congress and Judiciary. Any indication that the end product would be transparent?
//*Financial newspapers nowadays do not want to write about IT companies that are not listed in the Indian stock exchange or the Nasscom*//
Yes Nikhil, and such IT companies are doing *whatever* they can do to gain the status.
@Nita, Shefaly and others
Can anybody please explain how (and how much) this(little crisis in Fin sector) will affect other(which?) relevant fields?
@ Hoku
It is the lack of transparency – from CDOs to the outright short-selling beloved of some speculators loaded with money – that has been central to this crisis. You are right speculation can not be transparent; and I believe that outright bans (such as we have, a ban on short-selling banking stocks) will mean more ‘sophisticated’ derivative models will emerge which will enable the same sort of return outcomes and which will be equally obscure to the regulators.
Yet, many in the banking sector believe that unless more open models are put in place and more answerability enforced, there is no reason why this crisis would not repeat. What those models will look like, nobody knows yet.
New regulation will almost certainly come out of this.
In the UK, the banks that collapsed or had to be rescued were highly leveraged compared to the stable ones. So clearly debt ratios will be one area to be reined in. But that is for regular banks. Now that GS/ MS are one of them too, for them as well when earlier they could carry tonnes more debt.
I have my doubts about the rescue package. The number is an estimate I think. Both Congress and Senate are Democrat-controlled and I think they won’t let these measures pass unless there is an equivalent rescue package for those who lost homes to foreclosures. That wrangling will keep market uncertainty going. And in election year, it will be very difficult to do something un-populist even for the GOP.
@ Suda:
Suffice it to say it is not a “little crisis in Fin sector” 🙂
Suda@ ‘make no mistake’ it is not a ‘small crisis’. This is at least as big a crisis as that of ‘Great Depression’ of 1929. It took more than 15 yrs to overcome the great depression. Signs are ominous.
This crisis has the potential of affecting all sectors, making millions of jobless.
I would use Krugman’s first three points to explain – 1. The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.
2. These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.
3. Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.
Lack of availability of credit is going to increase cost of credit ( add it up with the inflation, which forcing central banks to keep the interest rate high) and every one requires capital to run their business. To know how Lehman’s failure is affecting Indian Real State sector read this news item at rediff (http://www.rediff.com/money/2008/sep/23bcrisis.htm ) .
Financial sectors of big economies are big source of revenue for our IT industry. So their revenue is going to be affected by state of Finance companies in USA. (Thankfully for them Dollar is getting stronger, that may cushion some of the bad effects)
If the crisis continues and people loss faith in the resilience of the system. They would continue spending less (this could also be due to less money in hand due to job loss). Lack of demand would affect all commodities. We are no longer isolated. So we now should be ready to face the bad side of globalization too.
One more point, we should be thankful to the reserve bank, which did not allow our banks to indulge in exotic financial derivatives. Other wise we would have seen a few Indian Lehman and Bear Sterns.
On the lighter side.
How economies are interconnected can best be explained by the comments maid by investment analyst and entrepreneur Dr. Marc Faber (aka Dr. Doom)
”The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy.
The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I’ve been doing my part.’
The tremors have effected the IT sector badly, though they are not projecting so…
Some companies have delayed the joining date given to fresh graduates.(Mine company included.)
Wipro has huge investements in lehman bros so do TCS and Satyam.(Article in Times of India business news.)
I was a little surprised to see Infosys missing from the list.
Richa, keeping your options open is the best!
Hoku, thank you for sharing your views and the information. By reading it and Shefaly’s reply it has increased my knowledge of the subject.
Shefaly, I agree that the crises is a big one and I am sure that there are many companies which are floundering which we don’t even know about. I keep feeling that we (public) don’t have all the info at hand…that’s exactly what you mentioned, the lack of faith that that people feel. It will take time for anyone to trust these “finance giants” again!
About jobs in India, yes, those who are smart and enterprising have nothing to worry about!
On your second point, about the wrong kind of people being weeded out, well, good for the finance sector, but not so good for others! 🙂
Nikhil, sure its going to have a major impact on the PR business…the industry is going to lose lucrative clients for one. But PR is exactly what investors need to worry about. I wonder what part PR played in the fancy image that these companies had. Well, I confess I know, having been at the other end. Newspapers just love writing about big companies just as you said and I think partly it is related to advertisements and partly due to the fact that editors do not trust their own judgment about unknown companies and partly because they feel readers don’t want to hear about them. . I remember my boss, he would refuse to let me write about any unknown company even if I felt that there was something interesting to write about! As a result, the press simply blows up the existing images of the established companies…dangerous!
Suda, as we are living in India and our economy is still growing at a fast pace, we are going to feel it less. But feel it we will. Its going to affect all industries in varying degrees, from real estate to advertising to PR. At the same time some companies might go into overdrive where PR is concerned… 🙂
It will affect start-ups as banks are vary of investment…just take it from there, anything that needs investment will face tougher norms. The insurance business is sure to be affected too. However there are other factors like higher interest rates which have already affected these sectors, I don’t think any industry will be immune from a fall out of a shake out in the finance sector, even if this is happening globally. India is part of it now. And as you can see from Sharad’s comment, many companies have invested in Lehman bros…all of them fell for the hype. I wonder if Nikhil was handling the Lehman account… 😉
Sharad, thanks for sharing that!
This collapse of the American financial institutions will definitely impact the global financial system. India will also have losses but the quantum may not be significant.
Financial services were the favourite destination for many an engineering (read IIT) and MBA students in the last four – five years.
This was on account of a unprecedented boom in the stock market fuelled largely by huge foreign investor inflow.
This boom impacted the investment banking, broking and mutual fund industry. Private Insurance players were also expanding their reach. With the introduction of stock market linked insurance products they were able to expand business tremendously.
This led to a chronic shortage of trained / experienced personnel and pay packets hit crazy levels. We had candidates with one – two year experience demanding Rs. 15-20 lakh packages. This phenomena fuelled a virtuous (now vicious) cycle of more students opting for Finance.
The slowdown has almost stopped further recruitment and laws of gravity are now affecting salary levels.
In a way, the current crop of students are lucky. It is far better to start with modest pay packets and work their way up rather than start with fantastic levels and face the prospect of being booted out a year or two later. The challenge this year will be that, campus recruitments will be a low key and limited affair.
If these conditions continue, then we will witness salaries being slashed and then pink slips being handed out.
As regards IIM / IIT grads opting for jobs in smaller companies – this may be a temporary phenomenon but of no benefit to the recruiting companies. These guys will jump at the first opportunity to “better” / “bigger” companies.
What is worrying is the impact of the economic slowdown on other sectors. We are witnesing belt tightening all across and nobody is betting on a quick return to those heady days very soon.
The current batch will have to struggle a lot and for pay packets which may seem a pittance. This seems inevitable.
I am sure this is going to affect the Indian IT firms too. Morgan Stanley, Merrill Lynch, Lehman Brothers and AIG are all clients of the company in which I work. There are thousands of employees working for projects for these companies.
I just hope that our salaries are not reduced because of the setback.
There is an increase in Financial services??? Hmmm… strange!!
@Amit: 1000 people of Wipro got laid off because they were all working for Lehman… Unfortunately, financial services companies are the biggest bread earner for IT companies 😦
well we need the financial world to recover soon,or we are in big trouble…interesting,more jobless people?
These companies deserved to fizzle out, for years they kept repeating that they require no regulation and that the financial sector can regulate itself and now look at them. Why should public money be used to bail them out! As for graduates I guess its a smaller problem compared with the mess that we are left behind. I am amazed that no one has learnt anything from the Japan financial crises, the economy there has still not recovered after decades. The only way we can exit this cycle is to head towards a moneyless society.
I completely disagree with hoku and agree with shefaly.
The mess that is unfolding minute by minute in United States is very severe.
The recover may take decades not just 2 years as suggested by hoku.
The reason why iam so pessimistic that we will ever see those days again is that the whole market that these investment banks created for the last 70 years (breaking out of regular banks) is wiped out.
With the latest crisis, the earning potential and growth potential is severely diminshed.
The stock market analysts are pondering how to rate these anks stocks given the crisis. No country is immune from this financial crisis as every country as mimicked the financial model of united states.
It is very unfortunate that ICICI bank too is exposed to this crisis. We don’t know how deep the exposure is. I have previously criticized ICICI bank for not coming open on this exposure. They are decieving the investors with Mark to Market model and declaring minor losses on their balance sheets.
However, the market will find new ways of making money and repeating the blunder. But for the time being Goldman sachs, Morgan Stanely are gone and their models of business are extinct.
We are back to regular banks where customers deposit money and have to expect a very interest rates on their savings.
Thanks
sri
India this year is poised to grow at around 7.5%.
So there won’t be dearth of jobs But starting salary levels would surely come down from the present Stratospheric Levels (IITs/IIMs).
Also, consumption plays a major role in our economy and once commodity & oil prices come down and settle at lower levels, the consumption story would resume.
People swarm into places where there is money. It is the greed for money in the form of attractive salaries that drive them to a particular career, atleast for most of them. I admit I took IT for that reason. But once the money is gone, the new batch looks for other lucrative options, until that dries out. It is just a vicious cycle and it keeps going. As for this time, I think the hit in finance sectore will have ripple effects throughout. The economy is so connected that if you pick any big industry and let it fail, it flows through all the supporting industries. It is hard to isolate the ones that are unaffected.
@ Hoku:
//It took more than 15 yrs to overcome the great depression//
It took US entry into WW-II to overcome the great depression. I am sure I don’t want any country today to take that route.
I have a strong feeling, that this time its gonna affect both the IT and the financial sectors..its gonna be a slow hit, but I guess we will see the effect
Rambler: Yes, IT sector will get hit big time as most of the IT services are applied to banking industry. Unless Indian government spends public money on improving services, the IT sector in INdia will enter a lul period threatening jobs.
Infosys, Wipro, Satyam who depend on selling such services to US will get hit the most.
Mavin, thanks. I agree that pay scales for freshers were reaching levels where everyone was wondering how they could be sustained! Now we know that they can’t be. But there is one thing you mentioned, about starting slow, and I think this is important from the long term. I know of people who by 30 are bought out of the market with their high salaries. They have nowhere to go!
Amit, I just hope you are not working on a project for Lehman Bros.
Nova, they have been paying the maximum…
Vishesh, more jobless people! yeah!!
Odzer, I am not sure whether the bailout was a bad thing, because I think if AIG wasn’t bailed out, it would have been quite a disaster. Well, that is what is being said…
Sri, reading your comment is unnerving indeed. Now you have put in my mind grave doubts about ICICI. They are claiming some minor losses, but frankly it is so easy to fake balance sheets and all of them do it.
Rahul, now I am having my doubts about the 7/5% growth. 😦
Dineshbabu, I wouldn’t call it greed. Greed is such a bad word isn’t it. I mean, all of us want the best possible financial package as life, at least in India, isn’t easy.
Rambler, you bet it is! It already has! Jobs have been cut.
In Germany too, news on job cuts is almost a daily topic on the news headlines: BMW is cutting on jobs altho’ its turnover is increasing and people wonder why. Due to the unions in Germany and stringent rules on sacking people, most companies outsource departments and people work on no proper contracts.
Let’s talk about real jobs and pseudo ones. You might wonder what I mean by that. From my own experience: When Allianz acquired the Dresdner Bank, the process of cost cutting began. First of all a new department called “Institutional Restructuring Unit” was introduced . This dept . was to last for two years and their job was drastic cost cutting and profit optimisation. They worked closely with McKinsey which was hired and paid millions to do this job together. I worked as a risk controller. Our team calculated the return earned on company loans. So basically we wrote reports saying which loans were profitable to the bank and which were bad (non-performing)loans which the bank should have rather gotten get rid off. The report went to the board and I must say no action was really taken until the bank did so badly and got acquired by Allianz. Another point is the IT systems were so outdated and not compatible with other tools that the numbers we got were not 100% reliable as to really calculate the returns – everything was sort of estimated. Now 2 departments did the same job – we using an American tool to calculate and the other dept. using their own handmade one. We paid a million dollar each year as license to use their tool which was again crap. The third dept was incharge of putting both the reports together and reproducing it in German for the board. So too many people doing the same task. Well, as long as the sun is shining bosses hire new people just to make themselves look important (“I have 20 peopleunder me, bla, bla”). They like to push themselves hire and create new unnecessary teams and when the weather changes, everything collapses and the layman wonders why so many get sacked or why so many job cuts. Its all a game and politics. my American boss used the American tool which is no doubt very good but is it worth if the data is unreliable and we are not able to really make good use o fthat tool. then the handmade tool of the other team was better. But then Allianz hired an American, the new man to their board – a guy from San Francisco of Indian origin. He obviously preferred us with our American tool and my American boss and he were from the same management school. So you see how important links are. The other team had to resign but at the end most of us left and everyone were integrated into a new team with a new boss. At the end of the day, it is sad since we work so hard and get peanuts as our salaries and the board members are paid great amounts for their follies and we have to suffer.
No worries for India. Most employers are very keen on India because of the diligent and intelligent youth as well as the exchange rate. I remember one of my colleagues telling me that “Indians are hired because they are cheap” which annoyed me and I told “no, because we can speak English which you can’t”.
Let me correct: They like to push themselves higher not hire.
@Bombay wadapav eater:
After that very perceptive analysis you still feel, at the end, that there are “No worries for India”?
Nita: If you are ICICI customer, then your deposits and savings are safe. However, spread/diversify your bank accounts such that RBI insurance covers your deposits in case banks run into problems.
If you are an investor in ICICI stock in particular or any bank stocks, then it is safe to be on the sidelines for time being.
Reasons why you should think twice in investing financial stocks are
1) Defaults are on the rise in India
2) Real Estate burst in some parts of the country is possible causing financial loss to banks.
3) IT jobs in India and almost in every country are at risk due to global financial crisis.
4) Even if Indian banks dodge all these severe financial turmoils, the growth rate of these banks atleast are limited due to liquidity crisis.
Again these are personal thoughts.
Thanks
sri
Great post, Nita, very timely. I can see by the long line of comments that you’ve touched on a topic close to the hearts of hard-working students. I feel for them, with the financial world in disarray. I just hope those CEOs don’t walk away with their pockets lined. It’s so wrong.
Nita, I think it’s a high time that Indian Government invested more in the Manufacturing sector rather than the Services sector. I have a friend working in one of the major financial giants that tumbled recently and thus I understand the plight. There was a report that the number of immigrants to US had delined since the last year. Here is the link to the report:
http://www.msnbc.msn.com/id/26842511/
This is a timely post with good analysis. A booming economy should one day inflate! This is a cycle. Let’s hope for the best.
Bombay wadapav eater, thanks for sharing that experience.
Sri, thanks. we do have our deposits in several banks (no bank shares) but one doesn’t feel like losing even a little money! The hard earned variety is hard to come by!
Christine, you have mentioned an important point, the ridiculous pay packets and perks that some ceo’s get. If a company can afford it, fine but usually if a company is in trouble few ceo’s are willing to take pay cuts.
Manoj, thanks. One should wait and watch like you said, who knows what one might discover in the coming months!
@# There was a marked decline in graduates opting for Technology, Engineering and Academic sectors, with a decline of 8 percent, 5 percent and 7 percent respectively
This is best news so far, I was quite frankly sick of engineers
@# The Consulting and Financial Services sectors saw an increase by 2 percent and 9 percent respectively
Recently I had meet a VC who repeated what you have said that’s, cool.
@# A small percentage of the recent batches have opted for new fields – Media and Entertainment, Sports, Literature, Rural and Non-profit sectors.
There is still some hope of Cheap Labor after all.
BTW: A brilliant article, Thanks.
Well, this slowdown is not a short term problem and its definitely going to affect the campus recruitment of all sorts of colleges. Companies like Lehman Brothers were not only recruiting students from IIM kinda college but they used to pick up students from colleges like SRCC and LSR as well. I think colleges esp. the big ones definitely need to diversify the profiles of placement firms and look at opportunities beyond investment banking or financial analysts.
You are right about the large pay packets and perks. In Germany, the CEOs don’t earn as much as their US counterparts tho’ its chnaging here now . Previously they had long-term contracts like us (upto 65 which is current retirement age) but they shortened it to 5 years and now even to 2 years. So if they don’t prove good enough the shareholder board can make them redundant but generally by the time the cat is out of the bag, it is too late. There are haevy losses due to bad decisions or no decisions at all. In our case it was bad loans. My friend who was the assistant of the CEO said that decisions were taken also on basis of friends. e.g. even the company that had the million Euro loan which did not perform well and it was sure the company would default, the CEO did not make an effort to get rid of the loan or settle down so that the bank gets the loan back because probably his wife and the CEO of the loaner were thick friends. It is unbelievable but influence does count here on higher levels here in Europe. Normal hard working youngsters lose their job despite good results since the numers are not good enough. The CEOs get a sack of money and seek another job. I know personally of my colleague – my highest boss, the risk officer who reported directly to the board who did not get sacked due to his older version of contract. He sits now in a nice room with wooden flooring and big windows at the end of the corridor so that no one notices with a secretary who has not much to do but file her nails and keep the newspaper ready for him. He busy reads newspapers and goes home after lunch sometimes. I wouldn’t say he is dumb but the new board risk manager employed a new risk officer so he is sitting there since it is too expensive for the bank to make him redundant so they wait until he turns 65 and retires. That’s life! Young graduates or young employees like me do feel frustrated. There is lot of politics involved in job cuts and obviously the economic curve. But the ridiculous part is that mostly a consultancy firm like McKinsey is employed to evaluate and cut jobs and the process takes so long that most people don’t sign the contracts “of making redundant” and by then new board members come up and the economy is again doing better and people are needed so they can work further but who is the winner – McKinsey or alike.
Kanupriy: No worries as I said. And id jobs were to cut down and campus recruitment cut, why can’t you young blood innovative minds start up firms. A good idea, a bit of luck and a lot of persistence is all you need. I am talking but it is difficult esp. as a risk controller who saw big companies dwindling money and getting bust – I ma very risk averse. But take Infosys and older companies like Tatas for example. I do hope that Indians start more companies, also abroad and prove to be good enough to be employers. Why should you want to be any employee – why not an employer? Why only the west has to be employers. I hate mcdonalds and burger king and alike. I often wonder why nobody starts a dosa diner chain all around the world or a wadapav chain? Annoying is when Indians are happy to have such chains in India considering them job producers when they actually ruin health and environment. Take for example Bayer or many other pharceutical companies: due to lose regulations, they produce all kinds of stuff in India which would never be permitted in Europe and all the chemicals land in the sea. Only Greenpeace would probably criticise but who is bothered as long as jobs are produced. People happily us etheir products and have lost the old culture of getting rid of pests without pesticides. Here on the contrary organic food is booming and in India, cotton farmers land up committing suicide after heavy bedts with bayer from whom they buy hybrid cotton seeds and pesticides.
With the salaries and market booming, I expected a saturation not a crash!
But for the campus recuritment students, since even the job of the professionals who were working for MNCs for years is at stake there would be less hope.
Also its time the lakhs earning folks to learn the value of money including myself, that nothing is stable in this world.
Anyways I hope that this would change in a few years and there would be a level where things would be stable.
atlast a post which relates to my life.
I am doing Engineering from one of the top 15 engineering college in India.I am in 4th year and i know how tough is to get a job at present time. Big companies are postponing their dates.Few companies didn’t came on the D-day.Our Previous batch got placed in only 1st 15 days of starting of placement session.
But this year it has been frustrating.HUh
Vivek,
Yes, I do. I am more optimistic. Also India has so much of young blood, it’s not an aging population like Germany or Japan or other EU countries so most companies want to sell their goods in India and financial sector will also employ since after all the banks do want to earn money ba giving mortgages and loans. Indians are not more loan-shy. They do want to take a loan and by a car, mobile or house or whatever and the buying potential is high.
really..its a tough time for anyone who graduates. .
apart from financial crisis the IT slowdown has affected huge number of people ..
people like me are still waiting for their joining dates which can be delayed upto next year march …
one year of our life goes down the drain ..
ppl who dont have an offer suffer even more …wiht no companies recruiting freshers. .
“Disheartening that despite a lot of jobs lying vacant in academic institutions people don’t want to go there and one assumes it is because the teaching profession does not compare well monetarily with other jobs. And few people today find the idea of a job on university campus exciting or romantic or noble.”
Interesting there is another aspect. One of my ex students who was selected on campus but has still not got call letter like Arvind, had tried taking up a teaching job for time being and out of interest. But the college refused to take him saying he will go after getting call letter and they dont want any short term teachers.
But yes, its true we have now less companies visiting for recruitment and most of selected students are sitting idle waiting for call letters. Its causing a feeling of desperation and helplessness.