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WALL STREET COMPANIES DIAL UP INDIA FOR RESEARCH ASSISTANCE
By JOANNA
SLATER CHENNAI, India -- Prassana Madan's phone rings here in Chennai, formerly Madras, in southern India and from half a world away she hears a familiar voice. An American investment banker wants an analysis of the performance of energy companies when tracked against macroeconomic parameters -- by the next day. The 23-year-old Ms. Madan and her colleagues scramble. "There's lots of pressure and lots of deadlines, but we want to make our bankers happy," she says. Ms. Madan is part of a growing trend. Hammered by an economic downturn and regulatory woes, Wall Street firms are turning to India for low-cost help to crunch numbers and research industries. Companies such as Morgan Stanley, J.P. Morgan Chase & Co., Zacks Investment Research Inc. and Moody's Corp.'s Moody's Investors Service are contracting out research or setting up their own support centers staffed by Indian chartered accountants and M.B.A.s. Others have jumped in but are wary of revealing it for fear of alienating clients, alerting rivals or upsetting their own staff. The researchers-for-hire say that a great deal of the work that goes into a report can just as easily be done in India. "We're not arrogant enough to think we can do the job of someone who knows the industry inside out," says Joseph Sigelman, a former banker at Goldman Sachs and co-CEO of outsourcer Office Tiger, Ms. Madan's employer. "But we can support them in a very meaningful way." Sending financial research abroad, however, also brings with complications. Investment banks have concerns about confidentiality and regulatory compliance. There is also often a drop in productivity, at least in the short term. Still, moving work to India is attractive at a time when companies are grappling with how to fund their research operations following a settlement with New York Attorney General Eliot Spitzer. Under the deal, research arms will provide independent investment advice and refrain from helping to generate other business. But it also means fees from those other deals will no longer subsidize research, making it difficult to hire staff. Enter India. Indian talent "will play a major role in preparing the background research for senior U.S. securities analysts," predicts Anil Joshi, senior managing director of Zacks Investment Research in Chicago. In order to remain competitive, he says, financial firms will "need an offshore model as an integral part of their research." The field is growing. Zacks says it will expand its approximately 40-person staff in India while Morgan Stanley and J.P. Morgan are planning centers in Bombay that will each employ roughly 50 people to start. Indian information technology are getting in on the act: Tata Consultancy Services is exploring ways to offer research services at its back-office joint venture, says CEO S. Ramadorai. OfficeTiger's Mr. Sigelman says he and co-CEO Randolph Altschuler realized the potential of the concept about four years ago during a late-night phone call as they commiserated about the difficulties of completing a presentation in the middle of the night. Their company began by assembling documents and PowerPoint presentations for harried investment bankers and lawyers. It expanded into performing the research and analysis that underpin presentations and reports. Today, about one-third of the work involves deadlines of less than an hour. Getting the processes into place is no easy task. In the first three to six months of sending work abroad, says Mr. Sigelman, productivity can drop before climbing. Customer concerns about confidentiality also require extra measures.
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