The reality of investment banking jobs in India

Investment banking is the latest buzzword across all the management students in India. Every MBA graduate today aspires to work as an investment banker. However, it is equally important to note that before students and professionals decide to jump into this field, they should make themselves fully aware about the benefits and drawbacks of investment banking jobs in India, the kind of work profile that are being offered to the majority of candidates, and more importantly having a realistic career expectations from this industry.

What is Investment Banking?

Investment banks help clients – large and SME corporate and government institutions – to raise funds through the issuance of equities (IPOs or Private Equity placements) and debts (bonds, loan). The investment bank acts as a mediator between potential investors and issuer while raising a capital for the firm.  Investment banking typically focuses on merger & acquisitions, capital raising / underwriting, and restructuring transactions. However, investment banking firms main focus is to advise clients on deal structuring and other regulatory / legal process involved in raising the money.

Investment Bank Types:

Investment banking firms can be broadly classified into three categories: Bulge Bracket firms, Boutique firms and Middle Market firms.

Bulge bracket firms are at the top of the ladder and operate in the upper end of the market. These firms work on some of the biggest deals typically worth over Rs 250 cr. Bulge Brackets in India are not clearly defined but some of the firms like JP Morgan, BofA-Merrill Lynch, SBI Capital, ICICIBank, Deutsche Bank fit into this category

Boutique firms typically work with small and midsized corporate firms. They usually engage in transactions less than Rs 125 cr. Most boutique firms' core focus is on M&A advisory and they don’t provide restructuring services. This is one of the growing areas and today with the rising M&A activities, there are several boutique firms opening in India. Some of the prominent Indian firms falling into this category includes Avendus, Ambit Capital, Enam Securities, Centrum capital, etc

Middle Market investment banking firms engage in transitions that fall between Bulge bracket and Boutique firms. However, unlike Boutique firms they offer full range of financial advisory services.

Investment Banking Job Profile Classification:  

Investment banking industry from the job / work perspective is organized into three divisions: Front office, Middle office and Back office. Professionals working in front offices have maximum client interactions (company higher management, investors, etc). This is one of the most grueling, high responsibility job and involves extensive traveling. Middle office job roles mainly involve risk management, financial control, due diligence and compliance with regulatory requirements. Back office jobs involve financial modeling, transactions, research, reconciliation and number-crunching support for the front office.

The realty:

Although today there are many boutique investment banks coming up in India, the fact is that the total industry size, number of M&A deals, etc are still much smaller  when compared to investment banking activities in any of the developed financial markets such as USA and UK. Consequently,  there are limited front end investment banking roles available in Indian market.

Majority of the front end associate and analyst roles are hired from top business schools in India such as IIM Calcutta, IIM Ahmadabad, XLRI, ISB Hyderabad, SP Jain, etc. This is one of the highest paying and most sought after jobs in the industry and it is highly competitive to break into this role. However, there are plenty of middle office and back office jobs available in India. MNC bank captives, KPOs, transaction advisory firms such as KPMG, PWC, Deloitte offer such kind of roles. These roles are not as high paying as front end roles but offer decent packages.

Piece of Advice:

Today, most MBA graduates from tier 2 and tier 3 schools work in middle office and back office profile. The exit opportunities and vertical migration (towards front end roles) are very limited in these profiles. As majority of these jobs are outsourced to manage the firm costs, these roles typically do not have much value add to the firms in terms of expanding and bringing new business opportunities. However,  there are also a few advantages of working in these roles in terms of balanced work life style, minimal travel, less strenuous and low complxity work.  

Every MBA graduate aspires to become a front end associate today, however, the reality is that a) there are only handful of such profiles available in India and b) firms are very selective when they hire candidates (high CGPA, strong undergraduate background) for such roles. It is also equally important to realize that life style of front end investment bankers is quite stressful and they are under constant work pressure. This kind of life style and work profile might not be suited for everyone who aspire to get into such roles. Having said this, it is not an absolutely impossible thing to get into front end roles. Candidates with not so competitive academic background and still look to break into front end investment banking roles, boutique investment bank can provide them ideal opportunity to start off their career as an analyst or associate.   

Thus our sincere advice to each one of you would be that before you jump and decide to make career in investment banking, you should all be aware of the above facts and realities of investment banking jobs in India while making important career decisions in your life.