Post globalisation era in greater mumbai june 2006 efi – solar foundation mumbai
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- Table: 6.4.1 D
- Table: 6.4.1 - E
Table: 6.4.1 CPerformance of ICICI Bank (over the last decade)
(Source: ICICI Bank) According to AMFI, the vertical split of UTI (a major player) into two divisions: UTI–I and UTI–II and the consequent VRS offers to its employee saw the number of UTI employees from across the country reduce from 2,500 employees to 1,200 employees. Consequently, in an effort to right sizing, the company resorted to outsourcing product-marketing activities. Table: 6.4.1 DPerformance of UTI (over the last decade)
(Source: UTI Mutual Fund) A new entrant into the mutual fund sub sector, Prudential ICICI has witnessed a virtual doubling of direct employment from 65 employees in 2000 to 130 employees in 2005. The rise in employment was largely on account of recruitment of marketing personnel, which is the reason why the company witnessed astonishing growth in AUM from Rs. 4230 crore in 2000 to Rs. 15,298 crore in 2005, a rise of 261 per cent, as the company offered as many as 30 mutual fund products as compared to 10 products offered in 2000. Table: 6.4.1 - EPerformance of Prudential ICICI (over the last decade)
(Source: Prudential ICICI Mutual Fund) 6.5. INFLUENCE OF IT ON JOB PROFILES IN MUMBAI (Over the last decade) 6.5.1 Banking sub sector As per the research study - ‘Evolution and outlook for banking in Mumbai’ undertaken by Bombay First, telecommunication and information technology is bringing about sweeping changes in the banking sub sector. These technological advances are helping banks strengthen customer relationship, thus helping them move towards ‘Relationship Banking’. Installation of Automated Teller Machines (ATMs), introduction of Smart Cards, Phone Banking, and more recently Internet Banking is gaining prominence in the city. The high cost of property is not a constraint for Mumbai’s competitive banking sub sector. With phone banking, net banking, and ATMs gaining prominence, the sector is in fact using physical space very economically. The increasing competition from private and foreign banks and the business paradigm shift to retail banking has forced SBI to move from the conventional manual banking to mechanised system of working. Phased introduction of ATMs, tele-banking, Internet banking, etc. necessitated re-skilling of employees in the area of technology and marketing so as to achieve business objectives and maximise profits. ICICI has had a major advantage in terms of technology. Core banking solutions, Internet banking, mobile and phone banking and many more technically upgraded services have already been integrated into its business processes. The bank had already started on a superior IT platform since its inception and there hasn’t been any dramatic change in job profiles. Saraswat was among the first to shift to a technological platform way back in 1991. Last year, the bank implemented core-banking solutions that entailed investment of Rs. 3,73,24,811. All the existing staff has graduated to the technology platform and manual jobs have become almost redundant. 6.5.2 Mutual Fund sub sector As most of the mutual fund companies were set up post-1993, business units were set up on a highly efficient technology platform. A highly technology intensive business, the mutual fund industry has not witnessed any downsizing due to IT. UTI the largest mutual fund company with a market share of 65 per cent retail investors (Rs. 21,102.89 crore asset management funds, 149 schemes) spends approximately Rs. 10-12 crore per annum on Information Technology. Like all other private mutual funds, Prudential ICICI was set on a high technology platform, thus there is no distinct change in job profiles on account of IT. 6.6 SHIFT IN EMPLOYMENT DUE TO DOWN SIZING (Over the last decade) 6.6.1 Banking sub sector According to figures provided by IBA in 2000, the PSBs offered a VRS package and approximately one lakh employees were directly affected in the banking sub sector. By 2010, most of the employees who have been employed in 1970’s would move out via the retirement route. The sub sector had to resort to downsizing as the banks found the operating cost to be significantly high due to the extraordinary wage bill. Most banks found the cost of maintaining employee to be higher than the cost of maintaining and upgrading technology; hence they resorted to investment in technology and reduction in wage bill. In addition to improving profitability of business operations, downsizing was necessary to improve productivity. In 2001-02, the VRS scheme offered by SBI lead to reduction of 20,700 employees, thereby bringing the total number of employees down to 2.07 lakh. The change in business focus of the banks and emerging competition from private and foreign banks has forced banks to realign and re-orient their employees, resulting into cutting the flab wherever required. 6.6.2 Mutual Fund Sector Except for UTI, which had a Voluntary Service Scheme (VSS) in 2003, the sector hasn’t witnessed any major downsizing. The business restructuring undertaken at UTI saw employee reduction from 2,500 to 1,200, as the company was split into UTI MF and UTI. A new entrant into the business, Prudential ICICI hasn’t witnessed any business reverses or downsizing over the last decade. 6.7 EMPLOYMENT REQUIREMENT IN MUMBAI (next five years) 6.7.1 Banking sub sector According to IBA, the banking sub sector is likely to witness a paradigm shift in systems, processes and strategies, and this would warrant creation of new competencies and capabilities on an on-going basis. The sub sector is likely to see several mergers and consolidations over the next five years, which in turn would make integration of human resource very challenging. The change in banking environment will necessitate the need for recruitment of specialists like economists, marketing, treasury operations, agriculture officers, finance executives, etc. In terms of direct employment for the next five years, Internet banking, Tele-banking, ATMs are likely to further reduce the level of human participation as non-core business operations are likely to be outsourced to specialists. Customer relationship management would be the order of the day, thereby creating greater demand for marketing oriented staff. IBA is of the opinion that business schools would be the fountainhead for future employees as they would be required to cross-sell products from mutual fund, insurance, etc. Over the next five years, due to increasing competition from private sector and foreign banks, SBI anticipates improvement in the overall performance of PSBs. Moreover, as these banks are giving greater thrust to areas like retail banking and agri-banking, future recruitments (if any) would be in the area of customer service and marketing/sales. It expects a setback for Treasury Income, as the present era of low interest rates is likely to continue over the next few years. The bank expects a dramatic growth in hitherto virgin business areas like virtual banking and electronic banking, i.e. ATMs, tele-banking, Internet banking, etc. resulting into growth in indirect employment and outsourcing. According to SBI, the sub sector would witness an increase in employment in specialised cadres only. Presently, the bank is in the process of Business Process Engineering (BPE), which would culminate into an exit policy thus resulting into further exodus of employees. Saraswat bank is of the opinion that over the next five years the sub sector would witness a series of mergers and acquisitions, thereby leading to further business consolidation. The bank has already submitted a proposal to the RBI for its amalgamation with South Indian Co-operative bank, Maratha Mandir Co-operative bank and Nashik Urban Co-operative bank. The amalgamation is likely to result into displacement of several staff, thereby creating a need for their redeployment into newer jobs or offering of VRS. The bank doesn’t foresee any substantial rise in direct employment in the short term but reaffirms that whatever recruitment done would be in specialised area like technical and marketing. ICICI bank is bullish on the growth of Indian banking sub sector in the next five years. It feels that all private banks would focus on expanding their operational network beyond the metro cities (rural banking) over the next five years. It feels that the present retail banking approach of 24x7x365 product/service delivery system will provide huge scope for business expansion, which in turn would create several jobs in the area of customer relations/client servicing. At the same time, experts cautioned that the employment generated would depend on a number of parameters because technology and manpower are interchangeable. Further, they emphasised that there is no direct co-relation between business growth and number of employees. 6.7.2 Mutual Fund sub sector Expansion of business network by existing mutual fund companies (beyond metros), entry of retail distributors and entry of banks into distribution business is expected to create greater awareness for mutual fund business in the country. According to AMFI-UTI, the sub sector is expected to witness a growth of 15-20 per cent in the next five years. A recent industry study by AMFI and ASSOCHAM (The Associated Chamber of Commerce and Industry of India) estimates the sub sector to grow from the present six per cent of the country’s GDP to 40 per cent in the next 10 years. A sunrise sub sector, AMFI-UTI is bullish on increase in employment, but cautions that it would not be ‘mass employment’ but ‘class employment’. A paradigm shift is expected in the profile of those employed in the sub sector, as it is likely to create employment opportunities for MBAs, CAs, CFAs and postgraduate finance specialists and not for conventional college graduates. Nonetheless, non-graduates, graduates would find indirect employment with distributors to market mutual fund products (subject to passing AMFI certification test). Prudential-ICICI Mutual Fund plans to increase its employee strength to 280 by March 2006. Most of the recruitment will be in the area of sales and distribution. 6.8. AVAILABILITY OF TRAINED PERSONNEL IN MUMBAI (next five years) 6.8.1 Banking sub sector According to IBA, though the PSBs have a common training institution – National Institute of Banking Management (NIBM), that help train new recruits acquire job skills and expertise, yet banks are seen to pick skilled and specialised personnel directly from the market. In order to meet global standards and remain competitive, banks are recruiting specialists in areas like treasury management, credit management, risk management, IT-related services, human resources management, etc. Moreover, for certain specific banking operations such as risk management, forex dealings, treasury operations, derivatives, securitisation, hedging, infrastructure lending, etc. banks continue to face problems sourcing experienced and qualified personnel. According to SBI, in order to meet the anticipated requirement of high-end skilled and specialist personnel, the bank resorts to campus recruitments route. Later these individuals are given in-house training in diverse areas of job specialisations. Recently, the bank recruited 20 IT personnel and 500 personnel for agriculture officers on a contractual basis. The bank has a college for computer training, research & development, human resources, etc., which look into the training and orientation of the employees. All probationary officers undergo a one-year training programme, which includes requisite IT training. Both ICICI bank and Saraswat bank are significantly dependent on campus recruitment for skilled (finance and technology) personnel, each of these banks believes in further orientation of the personnel. While ICICI bank has a well structured induction programme varying between 3-21 days for new recruits, Saraswat bank organises a series of 2-3 week induction programme followed by a week long on-the-job training on soft skills and job skill acquisition. The bank also imparts a six-day training for all staff once a year. Last year, it invested approximately Rs 6 crore on employee training. 6.8.2 Mutual Fund sub sector In case of Mutual Fund sub sector, as most of the direct personnel are required to have a strong finance background, campus recruitment is quite rampant. Through campus recruitments companies get personnel with the right skills who are later honed by way of in-house and on-the-job training. As for indirect employment, AMFI conducts a certification test, which is mandatory for all distributors/marketers of mutual fund products. Most of the recruitments that Prudential ICICI has undertaken have been through campus placements, and it hires MBAs and CAs only. And once the recruitment is done, the company undertakes a one-and-half month training, which covers functional and soft skills. The institution invests to the tune of 30-40 per cent of a new recruit’s compensation package on training. 6.9 TRENDS IN INDIRECT EMPLOYMENT (Over the Next Five years) 6.9.1 Banking sub sector Further, as the sub sector moved from ‘Regulated Interest Rate’ regime to ‘Customised Interest Rate’ regime, the customers benefited from tailor-made investment and loan products. This in turn created a huge scope for indirect employment, as banks appointed Direct Selling Agents/Franchises to spread their marketing and customer service reach. Most banks continue to be engaged in re-training and re-skilling existing staff. Future employment growth in the sub sector would be fuelled largely by indirect employees, i.e. franchising and outsourcing. Both IBA and SBI share the opinion that government’s economic policies and the business approach pursued by individual banks in the coming years would determine the magnitude of indirect employment. Larger the retail focus adopted by the bank, greater would be the scope for indirect employment generation. The product and service diversification undertaken by banks have led to creation of several business subsidiaries offering distinct products. For instance, SBI has subsidiaries like SBI Life, SBI Mutual Fund, SBI Capital Markets, etc. Each of these subsidiaries besides engaging direct employment also hire franchisees and other agents to market and distribute their products. As the retail segment expands, the scope for indirect employment will also increase accordingly. Contrary to the industry trends, Saraswat bank has been conservative in the area of indirect employment. The bank is undertaking the allied activities on its own including security, courier, encoding of clearing, cash van services, etc., and it doesn’t see any significant requirement for hiring external agencies. The bank did try to create a network of DSAs, but hasn’t achieved great success. 6.9.2 Mutual Fund sub sector According to figures provided by AMFI, the mutual fund sub sector provides huge scope for indirect employment through its distributor channel, R&T agents, franchisee and collection centres. Though a relatively new sub sector, already 30,000 individuals have been registered with AMFI to market the products. Further, with the growth of retail investors beyond the metro cities, the number of distributors and indirect employment will also increase. The association has introduced set guideline for engaging indirect employees, where distributors and commission agents are required to pass AMFI certification test prior to transacting business. UTI alone has 16,000 AMFI certified agents and 264 chief representatives in 56 branches (March 2005) across the country. Prudential ICICI has outsourced most of its non-critical activities like payroll processing, etc., thus indicating that indirect employment will be on the rise over the next few years. 6.10 CHANGING TRENDS IN EMPLOYMENT SKILLS (Next Five Years) 6.10.1 Banking sub sector In addition to experts in finance, ICICI is of the opinion that banks are on a look out for individuals with strong technical background. There is an increased demand for MCAs and commerce graduates with an aptitude for software development and Oracle certified professionals. Database administrators is another emerging area in the sector, however banks are looking for individuals who are flexible with job profiles, job preferences and technology. In addition to being technically sound, individuals are required to have good interpersonal skills as they have to interact with system analysts, end users and the management, during the course of their business assignments. Besides requisite academic qualifications, Saraswat is giving greater emphasis on individuals having sound understanding of balance sheet analysis and scrutiny of stock and financial statements at the executive level. While at the senior levels, individuals are required to master soft skills like project management expertise, leadership, planning, etc. Last but not the least, good communication skills is a must as individuals are required to interact with people at different levels within the company and with the customers. On the other hand, SBI is giving emphasis to personnel with marketing, technical and other specialised skills. Realising the omnipresent nature of technology in business, the bank is ensuring that in all future recruitments individuals possess requisite technology skills. In the area of retail banking, in addition to seeking customer service executives, the bank is laying greater emphasis to individuals with knowledge of database management and basic programming skills. Here again, individuals with experience in banking applications and skills in Oracle application are much sought after. While in the area of marketing, individuals with sound understand of strategies and concepts in product cross-selling are high in demand. With the bank focussing on rural marketing it is seeking individuals who have agriculture background coupled with rural marketing skills. 6.10.2 Mutual Funds sector According to AMFI, individuals seeking a career in the mutual fund sub sector are required to have a sound knowledge of the capital markets because mutual fund companies primarily invest in equity markets. Besides having requisite academic qualifications, some of the basic necessities that one requires is the ability to read and understand financial statements of companies, ability to use IT tools for tracking and projections, ability of decision making, sound understanding of industry/company performance trends, etc. Most of the recruitment in Prudential ICICI is done through campus recruitments. So people with requisite knowledge are recruited and then skills are imparted through induction. As for fund managers, the company only doing lateral recruitments in this category, as it requires experienced people. 6.10.3 Assumed percentage point for employment skills The employment skills that individuals are expected to posses to find gainful employment in the financial sector are given below along with their respective weightages (percentage points). These percentage points are purely based on our assumptions derived from interactions with individual interviewee during the course of the research activities. The percentage points should be read in the following manner – number of individuals expected to possess the said skill per 100 individuals entering the sector. 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