While economies and financial markets in the West are having a hard time, economies in BRIC countries like India are still in the lift. That offers opportunities for both financials in those countries as well as for professionals in the West. Ambarish Datta, Managing Director & CEO, and Vinod Nair, Head of Academics and Product Development, of the Indian BSE Training Institute Ltd. visited Nyenrode in August. They talk about the need for global expertise in financial markets.
BSE Ltd.
“The BSE Ltd. was founded in 1875”, Ambarish Datta says. “Starting as a native shareholder association, the BSE Ltd. is Asia’s first stock exchange and now has the largest number of listed companies in the world, about 5,000. The BSE Training Institute Ltd. was set up in 1989. We run about 70 short term courses for working professionals on a variety of financial and financial market related themes ranging from analysis, to financial planning, to risk credit rating. We also run certificated courses with a university. We work closely with 150 countries, in Africa, the Middle East, South East Asia and in Canada and Australia.”
“The BSE Ltd. was founded in 1875”, Ambarish Datta says. “Starting as a native shareholder association, the BSE Ltd. is Asia’s first stock exchange and now has the largest number of listed companies in the world, about 5,000. The BSE Training Institute Ltd. was set up in 1989. We run about 70 short term courses for working professionals on a variety of financial and financial market related themes ranging from analysis, to financial planning, to risk credit rating. We also run certificated courses with a university. We work closely with 150 countries, in Africa, the Middle East, South East Asia and in Canada and Australia.”
Shift
For years now, a shift is going on from countries in the West to countries in South and Southeast Asia. In industries such as IT and financial services, outsourcing jobs to those countries has become business as usual. The numbers of people working in finance reflect this shift. While at this moment, there are about 4.2 million people working in India’s financial industry, that number is expected to rise to 12 million in 2020. In the EU, it is now less than 6 million and the number is decreasing.
For years now, a shift is going on from countries in the West to countries in South and Southeast Asia. In industries such as IT and financial services, outsourcing jobs to those countries has become business as usual. The numbers of people working in finance reflect this shift. While at this moment, there are about 4.2 million people working in India’s financial industry, that number is expected to rise to 12 million in 2020. In the EU, it is now less than 6 million and the number is decreasing.
Ambarish Datta reflects upon the current problems of the financial markets in India. “During the Asian currency crisis and the recent global financial meltdown, the Indian banking system did fairly well. The foundations of our economic system are very strong. So is our banking system. This year, India is looking at an economic growth of at least 8%. Of course, every organization wants to be in a market that is conducive for business while no one wants to be in a market that is suffering.” Global expertise
With the world even becoming more flat, professionals have to work in a world that is increasingly truly global. “They have to come up with solutions and services that reach beyond their country’s borders”, Vinod Nair says. So they will need much more global knowledge than it is currently available to most of them. Datta: “As a financial expert you need to know about best practices and to go out around the world to see what is happening to become a truly confident finance professional. Take for example an Indian Chief Risk Officer from a large bank. If the dollars crashes, that will have a very large impact on his job. Therefore, he needs to be trained in global best practices in the US, Europe et cetera. Indian institutes will not be able to do that, because they don’t know. We need institutes in those countries to deliver that piece of education for him.”
With the world even becoming more flat, professionals have to work in a world that is increasingly truly global. “They have to come up with solutions and services that reach beyond their country’s borders”, Vinod Nair says. So they will need much more global knowledge than it is currently available to most of them. Datta: “As a financial expert you need to know about best practices and to go out around the world to see what is happening to become a truly confident finance professional. Take for example an Indian Chief Risk Officer from a large bank. If the dollars crashes, that will have a very large impact on his job. Therefore, he needs to be trained in global best practices in the US, Europe et cetera. Indian institutes will not be able to do that, because they don’t know. We need institutes in those countries to deliver that piece of education for him.”
In finance and technology, the need for global expertise is even larger than in other industries. “If you don’t act, you will become obsolete. Change is the only thing that is constant”, Datta states.
Awareness as a critical factor for success
“Companies that are the most successful in investing in BRIC countries are the ones who are aware of what works and what does not work”, Vinod Nair says. “The lack of awareness has made big players stumble. Companies have to realize that not everything is already in place in those countries. Are credit rating agencies reliable? How does the financial press work? In the west everything is very organized. If you have that framework in mind when you enter a BRIC country market, you will find out that many things are missing or inadequately functioning. So businesses have to realize that it is hard to duplicate the model they used in the west.”
“Companies that are the most successful in investing in BRIC countries are the ones who are aware of what works and what does not work”, Vinod Nair says. “The lack of awareness has made big players stumble. Companies have to realize that not everything is already in place in those countries. Are credit rating agencies reliable? How does the financial press work? In the west everything is very organized. If you have that framework in mind when you enter a BRIC country market, you will find out that many things are missing or inadequately functioning. So businesses have to realize that it is hard to duplicate the model they used in the west.”
For example, it took Unilever about 15 years to see that the economic condition of people in countries like India combined with the number of people required a different approach for selling shampoo. Datta: “Especially in a country in which 95% of the people does not perceive any value of the product. After bringing the packages down to a fraction of their original size, Unilever saw volumes go up 100 times. Now all other companies are copying that strategy. If you know how to adapt the money businesses can make in countries like India is gigantic.”
Financial services adapted to local circumstances
It all comes down to adapting to local circumstances. The same applies to financial services, Datta believes. “In the next years cross border activities will go up phenomenally high. It won’t matter anymore where your firm is based. That means financial experts need to have profound knowledge of what goes on in the countries they are dealing with.”
It all comes down to adapting to local circumstances. The same applies to financial services, Datta believes. “In the next years cross border activities will go up phenomenally high. It won’t matter anymore where your firm is based. That means financial experts need to have profound knowledge of what goes on in the countries they are dealing with.”
When Indian steel giant Tata acquired British-Dutch Corus, neither India nor the Netherlands could provide for the proper expert skills for such a deal. Because of that, much of the revenues of the financial services connected to deal went to cities like London and Singapore. To be competitive in international financial services, you need to know about the ways and regulations in the countries you are doing business with.
Both gentlemen expect products and services in the future to become available across countries with some variations to suit the local environment. Nair: “Therefore financial experts need to know the laws in the different countries so they can finetune what they are offering.”
The BSE Training Institute itself offers programs that provide for that need. For instance, it is now running a course on Islamic finance. Datta explains: “Not that the market for Islamic finance is that big in India. But there are many people who want to find out what Islamic finance is, because India is closely connected with the Middle East. Therefore, people want to know how it operates. In the future, the color of the money won’t matter anymore.”
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