CHARTERED accountant, once a title that guaranteed a cushy job in India, is losing its sheen as a broad-based slowdown is spreading across the entire spectrum of financial services in India and overseas.
“This year was perhaps the worst ever in terms of the percentage of final year students who were placed during the ICAI placement with only around 15 per cent students registered getting jobs. This is much worse than the percentage achieved even during the 2008 global financial crisis year and half of that achieved in the previous placements,” said Pankaj Jain, council member at Institute of Chartered Accountants of India.
In the previous round of placements, according to Jain, the ICAI achieved a success ratio of almost 30 per cent students who had registered. The institute organises placements during February-March and August-September each year.
K Raghu, chairman at the ICAI’s committee for placements, said, on an average, the institute places 1,500-2,000 CAs every cycle out of 3,500-4,000, who are interested in jobs. “Lot of CAs work out career paths on their own and merely register in the job fair to independently find out their market worth. In our placements, around 100 companies participate on an average,” said Raghu.
“The balance students who don’t get placed either pursue further studies or in many cases set up their own practice,” said Jain.
This year has been particularly trying for financial services professionals as the whole swathe of financial services businesses have slowed down. New business premia at life insurance firms are down while general insurance companies are mired in losses. Banks and NBFCs have both seen a slowdown with reduced demand for loans from corporates as capex gets frozen on concerns with respect to final demand. The broking business has also seen a huge drop in volumes, which has led several brokerages to seek buyers to stay afloat.
“There is an overall reduced demand for talent in the financial services business. Private banks and distribution houses have both been facing a major problem as fee income from distribution of mutual funds and insurance has declined. Many foreign banks are shrinking their retail portfolios too. So in such a scenario it’s understandable that demand for fresh talent is muted,” said Shahzaad Dalal, vice chairman at IL&FS Investment Managers.
According to Prime Database, debt raising in the six months ending September 2011 fell 12 per cent to Rs 1.02 lakh crore. “The financial services business has been a large employer of CAs for the past few years, but this year, it has cut down on hiring and, in fact, had let go of several professionals due to weak business conditions. With the industry globally being weak, BPOs too, have not been hiring for lower demand overseas,” said Amit Tandon, MD of Institutional Investor Advisory Services.
According to Tandon, most financial services firms are going slow on their expansion plans as their bleeding balance sheets are making it difficult to sustain losses in bear market conditions. For students who thought that they could take a sabbatical from work and focus on completing their CA for better job prospects, the low placement ratio would be a bitter pill to swallow. In fact, this year has seen one of the highest number of students passing out in recent times at about 11,000, according to Jain. This has helped the Institute of Chartered Accountants of India become the second largest accounting body in the world (behind the US) with close to 180,000 chartered accountants in India, added Jain.
“The broking business in India has seen a 30 per cent drop in turnover with a drop in both volumes as well as commissions. Retail broking volumes are virtually non-existent and the investment banking market is virtually dead while deal making by private equity firms have slowed to a trickle. The primary market for fresh equity capital raising too is in a very bad shape,” said Atul Kumar, CEO at boutique investment banking and wealth management firm Genome Capital.
The last six to eight months has also seen mutual fund assets fall by 15-18 per cent, something which did not even happen in 2008 at the time of the global financial crisis. Sales and dealing staff at many brokerages have been halved while wealth management firms have culled their employee base. “Many investment banking firms have retren-ched staff while mutual funds too are barely hiring. Insurance firms too are barely recruiting so where is the new demand going to come from,” said the CEO of a large industrial house-owned financial services group, who did not want to be identified.
“There has been a 20-30 per cent reduction in employment in the banking financial services and insurance sectors and this reduction has not yet stopped. Even salary growth in the sector has been blunted,” said Manish Sabharwal, chairman at Teamlease Services — one of India’s largest temp staffing firms. In fact, data on the biannual placements organised by the ICAI suggests that the average salary offered to freshly qualified CAs in the latter half of calendar year was lower than that offered in the first quarter of the calendar year. “There has been a perfect storm in the Indian financial services industry,” said Sabharwal.
Industry experts point out that CAs have been falling off the pecking order in terms of prestige as the supply of MBA graduates with a finance specialisation has ballooned. “CAs are being hired more for pure audit, tax and accounting functions as the MBA course design is superior than the CA even though very bright people are doing the CA course,” said Dalal. As a result, where once the best and brightest pursued a CA degree now that qualification alone may not be enough to secure a career. “Standalone CAs may only be employed as accountants. Most others will need to get another professional degree as well, to move beyond. The tendency has been for such candidates to first pursue a CA and then do other courses,” said Kumar.
“Many employers are recognising that you don’t need MBAs and CAs for some particular kinds of job profile. Instead of hiring such people at high salaries and suffering high attrition they are now seeking more appropriate skills for the job in hand and people who will be ready to move to smaller cities and towns where the growth is happening. This is a sign of a maturing labour market,” said Sabharwal.