How bankers get paid

Watched this on BBC - HSBC Chairman Stephen Green talking on how bankers' compensation structure is one of the reasons of the recent meltdown & something that needs to change: "I think it is important and will become much more the focus of attention to ensure that remuneration schemes operate in a way that is lined up with the long term interests of the owners of the business. There has been far too much focus on payments that are very short term focused, people who pick up the tab for short term profits, without having to bear the costs of long term impairments."

While I agree whole heartedly with Green -- (in all banks, performance-bonuses are based on how much revenue you generate in the previous year/ quarter/ month) -- I also realise that this "reform" is attractive only in theory. For the simple reason that banking, like any other business, is a matter of demand & supply. When the going is good, the shareholders & owners of the business want to see quick growth; they don't want to see their money sit idle in a risk-averse but slow-growing bank; they want to see quarter-over-quarter returns. And there will be demand for professionals who can deliver exactly that.

Facebook

Yesterday when Microsoft picked up a stake in Facebook, there was a lot of talk about how a 3-year-old company was valued at $ 15 billion & became the most expensive internet start-up.

I'm an avid Facebooker & I think its a brilliant concept: not just as a networking site or as a business idea, but as a platform for creativity.

I continue to be amazed by the hundreds of new tools that young "college-students-cum-entrepreneurs" come up with everyday on Facebook. I read somewhere that the makers of one of the Facebook applications (was it "The Super Wall"?) are millionaires in their own right.

Its like a beauty contest for creativity; and that makes it fantastic.

Wall Street

The other day we were walking down Wall Street and apart from a couple of banker-types, the street was filled with a multitude of tourists clicking away at the NYSE building. Isn't it incredible that a single ordinary looking street (and it really is such a narrow ordinary street)with nothing but office spaces & banks should become such a huge tourist attraction and a symbol of American prosperity?

Service Center to the World

I had read a lot about the flourishing outsourcing industry in India; but the other day I heard someone from the industry describe this whole new BPO world within the Indian cities & it was an eye-opener.

Large western companies outsource their servicing requirements to India, but do not necessarily want their clients to know that their calls are being answered by Indians. Not only are the tele-executives trained to speak with western accents; they’re trained in western culture & key telephone phrases from the west. They’re also encouraged to adopt western ‘call center names’ when speaking to clients, rather than their regular Indian names. But here is what was disturbing: hate-calls from customers are not uncommon at all. There will ever so often be this freak American who will call up & scream about the bloody terrorist race taking over his job!

These are after all 18 to 20-year-old university students answering the calls & I cant help but wonder how they feel at the end of the day. Do they still feel connected to their country & culture?

My New Hero!

I first heard of Vikaram Akula when he figured in Time magazine's 'Top 100 People Who shape our World'. Wow, what a tremendous story! A Yale graduate and later a McKinsey alumni who quit his cushy consultancy job to start a micro-finance company because, he said, "the level of povery in India was unacceptable". The company aims to empower rural women and has disbursed $72 million of loans to poor rural Indian women with an average loan-size of just Rs. 5000 to 10000. And the company has a 98% on-time repayment history! This is not a charity but a professionally-run bank; and a case-study today for all business students in the country. Would love to work with this man someday!