Outsourcing: Dashing Wall Street Dreams For Ivy Grads
Outsourcing is here, it’s growing, and it kind of sucks. First it was limited to low level work: call centers and their ilk; things American college grads weren’t competing for. But now, more and more, outsourcing is rapidly encroaching on jobs that have historically gone to Ivy League students: analyst positions at New York investment banks.
According to a recently published article in the Times, Wall Street’s woes have fueled a bona fide bonanza of work in cheaper locales like India and Eastern Europe, where the research tasks that were once handed to newly-minted college grads and M.B.A.’s for salaries in excess of six-figures can be had for a fraction of the cost.
At India-based Copal Partners, which “churns out equity, fixed income and trading research for big name analysts and banks… business is up about 40 percent this year alone.” Similar upturns in work have been seen by other third-party firms as well.
It doesn’t seem like outsourcing will stop just there:
After research, the next wave may include more sophisticated jobs like the creation of derivative products, quantitative trading models and even sales jobs from the trading floors… In the future, executives in India like to joke, the only function for highly paid bankers in New York or London will be to greet clients and shake hands when the deals close.
More sobering quotes for all you finance types after the jump.
“Wall Street has to look at the world differently,” said Manoj Jain, the chairman of Pipal Research, a 400-person firm with offices in Chicago, Delhi and Gurgaon. Moving high-value jobs out of high-cost cities is “no longer a hypothesis,” he said.
Well, if you can’t beat your competitors you can always join them:
Daniel Peng, who will be a senior at Dartmouth next year, is working in the equity research department of Copal Partners as a summer intern. “I thought it would be a good emerging markets experience,” he said.
Tellingly, Mr. Peng still hopes for an old-fashioned Wall Street job when he graduates. New York would be “ideal,” he said.
I guess this puts all you econ/finance types in the same position as all us liberal arts lackeys, but I’m sympathetic to all you current and would-be investment bankers, I really am. I mean, how am I supposed to mooch off you if you don’t have jobs?
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August 15th, 2008 at 1:26 pm
It’s nice for the elite to feel the pain of outsourcing for a change, when in the past it was low-skilled workers that bore the brunt of globalization and immigration. The next obvious thing to outsource is the legal research and writing done by BIGLAW associates.
October 5th, 2008 at 4:32 am
Read this article from :
http://www.xwallstreeters.com/content/forum-topic/crossroads/wall-street-investment-bankers-will-do-shiitty-jobs
Pasting some excerpts here :
According to a report by Deloitte Touche Tohmatsu: “After years of outsourcing technology support and other back-office operations to countries like India and China, financial institutions are increasingly looking to move large portions of their investment banking operations abroad. As a result, what began as technology support is now morphing into more analytic operations.”
A lot of investment banking jobs involve number crunching. Even before this Wall Street crisis hit, big Financial Institutions like JP Morgan Chase, Citigroup , the now defunct – Lehman Brothers had been offshoring research analyst positions. These are just the initial steps. According to the same report : “Some experts expect that as banks become more comfortable with their offshore operations and foreign talent becomes more attuned to the companies’ way of doing business, financial institutions may even shift some deal-making responsibility onto its foreign employees”. That report came out in 2005-2006 long before this crisis happened. With some of the Wall Street Financial giants collapsing, investment banking itself will slowly become a rather rare commodity to be hotly pursued as a career anymore. For the jobs that remain in this area a pressure to cut costs and save money will drive wages down and push work overseas at a faster pace.
Do these Corporations really care about America maintaining a leadership in Science, Research and protecting its intellectual prowess. It seems as though Science/Mathematics/Analytical Research students who may love their field of study are increasingly faced with a dilemma nowadays. Wile they could get a higher education here they will almost need to move to a country like China or India to actually do their work. When the actual work base shifts to another country it will not be long before our educational institutions will also fall behind and will slowly lose its edge in that area. With less students showing interest because they cannot even work in their field at home, the departments at the Universities will not be able to sustain themselves.
In the past, our politicians and even the industry leaders touted that to keep America competitive on the intellectual platform we needed to get the brightest and the best brains from around the world to contribute within America’s economy by bringing them here. But is that really true ? If they truly meant that, then offshoring that intellectual capability seems to be a counter argument. All the big Corporations wanted was cheap labor. It is even more cost effective to have the labor just contribute the work directly from the low cost countries. The intellectual capability can stay offshore as long as it promotes cheaper cost for the Corporations. It was never about the advancement and fostering of high skilled disciplines in Science and Technology. It was about money savings for the big business.
It does not even necessarily mean better prices for the American consumers. Price reductions of goods and services that have been offshored are greatly exaggerated. Yes, those who do the work to produce the goods and provide the services are paid much less. But most of that cost saving ends up as increased corporate profits and expanded CEO pay, very little is passed on to consumers. How much cheaper are athletic shoes as a result of their being produced offshore?
The Mckinsey Global Institute has published data that shows a $0.26 loss for U.S. workers resulting from every $1 offshored. This undermines the economy, it does not stimulate it.
Harvard University economist Robert Z. Lawrence, a free-trade advocate, says, “If foreign countries specialize in high-skilled areas where we have an advantage, we could be worse off. I still have faith that globalization will make us better off, but it’s no more than faith.” Offshoring only gives a competitive advantage to those companies that engage in it. Rather than increasing competition, offshoring tends to concentrate economic power in fewer hands. What is happening today is a slow and painful offshoring of America’s Middle class at large.
October 5th, 2008 at 4:34 am
Since the above article paste is all jumbled up .. pls see the original article at :
http://www.xwallstreeters.com/content/forum-topic/crossroads/wall-street-investment-bankers-will-do-shiitty-jobs
December 29th, 2008 at 1:24 am
Ponder this: India is now outsourcing.
http://www.iht.com/articles/2007/09/24/business/outsource.php