Hey Monkeys,
As work-from-home becomes a new reality now, what do you think could be the long-term impact of this on the IBD division?
Do you think that if this model proves to work, banks might decide to limit their Analyst intake in major financial hubs (NYC, HK, London) and hire more support roles in emerging countries, like India?
Interested in your thoughts on his.
Stay safe!
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This model has always worked in the sense you're describing, i.e. it's possible to do most analyst work remotely. But as many other threads have pointed out, IB is in large part an apprenticeship, a pathway for grooming future bankers. Otherwise, analyst work would long have been offshored. Unless this aspect of banking changes, I can't imagine any significant impact on how analysts are trained and hired. I think a more relevant question might be whether firms would consider more flexibility for IBD analysts to WFH in the future.
This is spot on. Had a senior banker say about as much to us at one of those fireside chats they do for juniors every so often - yes they can probably get a guy in India who can do the same quality of work for 1/5 the pay, but the point of the junior program in the long run is to train the next generation of officers for the firm. It has to exist in some form in order for the firm to survive past its current crop of MDs. You might not always have giant bullpens with dozens of analysts cranking in excel all night (headcount might shrink dramatically), but there will always have to be some kind of a junior program.
GS had a trial program to offshore parts of IB to India, but the work quality wasn't there. Their Salt Lake City analyst program was interesting and basically soft outsourcing/farm team, but that's been nixed too.
BBs still outsource a portion of work to India, but it's usually research or charts, and even that product is sometimes questionable. NYC/London/HK Analysts are extremely cheap. It's better to have highly educated, hard working keyboard monkeys instead of trying to teach someone in India to do nuanced work
Banks would still like people to move up in the ranks to eventually become a senior member bringing in business. You won't be able to learn the necessary skills from behind a monitor in a developing country.
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