The Hindu Business Line : `Financial services will be bigger than ITeS sector volume'

Hyderabad May 1 The volume of financial services will be three times bigger than the volume of ITeS services in India over next 15 years and the employment generation would far exceed the BPO industry, according to Mr Percy S. Mistry, Chairman, Oxford International Group.

This is because of the advent of significant portion of International Financial Services (IFS) to India and surge in volume of domestic financial services," Mr Mistry, who headed a high-powered expert committee on making Mumbai an international finance centre, told Business Line here.

Already, many global financial firms are mulling shifting of jobs to India. This would be followed by the arrival of internationally known financial firms.

"Expansion of IT services firms cannot bring or sustain a leading position for India in IFS. It can only be done by qualified and internationally known financial firms," he said.

In addition, a strong base in IFS can save lot of unnecessary expenditure for India. The proliferation of India MNCs abroad, the huge investments the country has to make in sectors such as infrastructure have already increased transfer pricing and fund-raising activities.

Infrastructure

For infrastructure alone, we need to borrow $80 million per annum. All these add up to the quantum of IFS transactions, Mr Mistry observed.

"Indian clients alone purchased $13 billion of IFS in 2005. It is estimated that by 2015, this could rise to $48 billion," he said.

Further, increasingly, the financial services are being out sourced to India and this would call for steps to develop financial services sector as different from BPO or IT services, he added.

Notwithstanding the opportunity, there is much to be done to cash in on the IFS boom. "Top priority should be given to create a talent pool to take on the huge employment potential in IFS. The talent needed for information technology and communication sector is different from the requirement for financial services," Mr Mistry said.

With the employability of graduates at a low, the best way to create talent for financial services would be to forge collaborations with reputed financial institutions and business schools.

"The Indian School of Business (ISB) here has some tie-ups with US business schools. This should be replicated by all major universities in the country," he opined.

Further, financial reforms like a unified regulatory framework for domestic and international financial services, allowing Indian apex holding companies to create financial conglomerates, removal of artificial barriers between various financial market segments should also be taken up, Mr Mistry said.

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