I get a lot of questions about this one, but everyone behind M&I is relatively clueless when it comes to India.
Luckily, that’s not the case with our readers – many of whom work in the region or are planning to in the near future.
This interview comes to you from a reader who landed a boutique investment banking Associate position in India, coming from a non-finance background (engineering).
Read on to learn all about investment banking in India, how it’s different from North America and Europe, and how you can break in.
Q: Can you tell us about your background?
I was an Electrical Engineering major from one of India’s top engineering schools, and I worked at a top IT company here for 5 years, after being recruited on-campus.
I was on assignment in the UK for 2 years, and also had entrepreneurial experience co-founding a software firm.
Things did not work out and I chose to close it down a few months before starting my job search.
Q: Ok, so you started the job search after you had already been out of school for many years and after you had experience working full-time and starting your own company.
What were the key challenges you faced in breaking into investment banking?
The two main ones:
- I didn’t have a finance degree, so most larger investment banks refused to even look at me.
- Many firms were reluctant to hire me due to my age.
Since investment banking is a relatively new field in India, the consensus here is that only Chartered Accountants (CAs) or finance MBAs can handle the job. I had to convince firms that even someone without those credentials could do it.
Also, many firms in India pick mostly post-graduates and offer them Associate roles – relatively few banks here actually have formal Analyst roles.
Q: Ok, so you faced quite a few challenges. What about the recruiting process in India? How is that different from other regions like Europe, North America, and East Asia?
I don’t have firsthand experience of applying to those regions, but here are some key points to be aware of in India:
First, there are far fewer front-office investment banking jobs – only around 2,000 to 3,000 total – despite the size of the economy.
That means that bulge brackets are even more selective, and that they only pick students with MBAs from top schools in the US, Europe, or from the top Indian Institutes of Management (IIM). Sometimes CAs with a few years of banking experience are also picked for front-office roles.
Next, the majority of investment banking jobs in India are in knowledge process outsourcing firms (KPOs) – “Captive KPOs” (part of bulge bracket banks) and “3rd Party KPOs” that serve many clients.
It’s easy to get lured into working for these KPOs, but I strongly advise against it because you’ll get pigeonholed into making pitch books and doing valuations all day.
They try to spin it in a positive light by sending you abroad for 2 months, but it’s not real front-office work – the exit opportunities are limited, so I would avoid this if at all possible.
Since the majority of investment banking jobs are at KPOs, the actual front-office teams at real banks here are small – maybe 30-40 people for bulge bracket banks and 5-15 for boutiques.
The interviews are similar to Europe / the US – you start with a phone interview first, then meet the Associate, VP, and so on.
Overall they’re more “by the book” and more technical – some firms also ask you to create models and complete case studies.
Most undergraduates are recruited from top engineering schools like IIT – unlike the West, the best Indian students go to engineering or medical schools, so that’s where banks recruit.
Breaking Into Investment Banking
Q: So you already had the odds stacked against you, and you were in an extremely competitive market with a lot of engineers trying to make the switch into finance.
How did you set yourself apart from everyone else?
I knew that my resume was strong, since I had worked at a top IT company and also had experience starting my own – the only problem was that I lacked an MBA.
I used 3 strategies to set myself apart:
- I had been an active stock investor since college and had managed funds for several other people. I had decent returns over the years, and attached my portfolio performance over the past 5 years to my resume.
- I completed a short financial modeling course and leveraged that to get contacts in the field.
- I relied heavily on networking and cold-calling since on-campus recruiting wasn’t an option.
I thought about studying for the CFA as well, but then I saw your comments about it and decided not to!
Q: Maybe you can walk us through your networking process. I get a lot of questions on how to find names and contact information in the first place – how did you do this when you had already been out of school for years?
There were not many alumni from my college in investment banking, since the field is relatively new here.
I got some contacts through the financial modeling training program I went through, and I also used LinkedIn, Facebook, and plain Google searches to find people.
I cold-called over 200 firms to receive my first interview.
Q: Wow. So of those methods, which were most effective in getting you interviews?
I attended a lot of meetups in Mumbai that I found on social networks, but most folks didn’t respond positively because of my non-traditional background.
I was humiliated at first as I received rejection after rejection, but then I got used to it and kept at it since I knew from your other articles that cold-calling definitely worked.
I focused on boutiques, and after hundreds of calls and weeks of effort, I was invited to my first interview – and won an offer after 8 grueling rounds of interviews.
Q: I get a lot of questions on the usefulness of financial modeling courses. How much did yours help you?
It helped in 2 ways:
- I had no formal finance background, so I needed it to crack the interviews and pass any modeling tests they might have given me.
- Perhaps more importantly, I made some of my networking contacts through this course.
Even now after I’ve started, it has proven helpful because many boutique firms do not have formal training programs for Analysts – so it gave me a head start on everyone else.
Culture, Models, and Bottles
Q: How do salaries and bonuses in India compare to what you would earn in North America / Europe?
Is everything based on local rates, or are you paid the equivalent Dollar / Euro salary?
In absolute terms, salaries are less than what you would get in New York or London, for example.
But the cost of living in India is also much lower – so if you take this into account, the actual quality of life you could get with your salary is comparable.
Here’s the pay scale for base salaries:
- Front-Office Bulge Bracket Banks – Pay the most, often higher than New York/London in PPP (Purchasing Power Parity) terms due to the lack of qualified candidates.
- “Captive” KPOs – Also pay a lot, but the work sucks.
- Boutiques– They start out lower than the “captive” KPOs, but salaries scale up higher after a few years.
- 3rd Party KPOs – Pay is the lowest and the work also sucks.
Exit opportunities from the first 3 here range from “decent” (KPOs) to “great” (boutiques / bulge brackets).
You should avoid the 3rd party KPOs – but also keep in mind that “captive” KPOs are a dying breed since many firms have sold their divisions.
Bonuses have been excellent at bulge bracket and middle-market firms here – if the economy is great and deal activity is on the rise, bonuses can be as much as 100-250% of base salary.
Boutique bonuses average 30-75% of base salary, while “captive” KPOs are 30-50%, and 3rd party KPOs are even less.
Q: How is the culture at Indian financial services firms different from what you see elsewhere in the world?
Indian firms tend to be more conservative, and the financial markets here are not as well-developed – the bond market is negligible and derivatives trading does not involve the complexity found in North America / Europe.
Also, business here is based on relationships and proximity to important government officials – it’s less “professional” than the West.
About Your Future
Q: You defied the odds and broke into investment banking after you were already out of school for years, in an incredibly competitive market.
How will you leverage this experience in the future?
I want to work at a top private equity firm one day – but during my job search I found out that a top MBA is becoming indispensable for IB/PE jobs due to the branding and the network you gain in the process.
People also tend to listen to you more readily if you have an MBA from a top business school.
So I’ll be pursuing an MBA in a year or two – but since I’ve already broken into investment banking, I’ll pursue a 1-year MBA rather than a 2-year program.
Further Reading on India: