Ashish Sinha, a middle-management employee with Lehman Brothers' business process outsourcing unit in Mumbai, was going to move into a bigger house in October for a rent of Rs 16,000 a month. He was also planning to get married in the middle of the month.
However, since Monday, when Lehman Brothers filed for bankruptcy, he found himself jobless. He has approached his new landlord to refund Rs 2 lakh, which he had given as a security deposit.
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The situation is worse for Preeti Sagar and her two colleagues, who are in their mid-twenties. They have rented out a flat near their office at Rs 50,000 a month. Now they have no idea how they will continue to stay in that house.
Around 1,200 employees of Lehman Brothers' BPO in Powai, a Mumbai suburb, are facing similar problems. They have a deadline of 15 days to find a new job. They are free to come to office, if they wish to. And they have been told that this month's salary is their severance package.
The mood at Lehman's investment banking and broking business is not too different. The saving grace: employees do not know what is going to happen. "We are simply reporting to office and making calls to head hunters, chatting up with friends and playing computer games," said an investment banking employee. Many are hoping that Barclays Bank will bail out the Indian operation as well.
In DSP Merrill Lynch's equity proprietary business, which was headed by Andrew Holland, the scene is rather gloomy. Since his sudden departure with his top team, things have been quite shaky.
Add to that the takeover by Bank of America, and employees are not sure how things will work out. "It has become very difficult to interact with clients," said an investment professional.
No wonder, recruitment consultants are being flooded with resumes. An HR consultant said he has received more than 10 calls from people working in the financial sector. Just a few months ago, the situation was quite different. It would take a consultant at least three calls to convince these finance professionals to even consider a meeting.
What will be hit most are salaries. "While getting a job in the present situation may not be an issue, salaries will be renegotiated. It will certainly be 30 per cent lower than what they get today," said an HR consultant. This is mainly because leading financial institutions have already declared that their increments will be in the range of 10-15 per cent. Bonuses, which are often multiples of the annual salaries, will be hard to come.
Compare this with the situation just two years ago, when Lehman Brothers struck one of the biggest real estate deals in Mumbai in June 2006. The company rented 30,000 sq ft at the rate of Rs 320 per sq ft in the upscale Ceejay House in Worli, Mumbai -- a monthly rental of almost a crore.
Sources say that barely a year ago, the company's BPO employees were taken to Amby Valley, a luxury resort in Lonavala near Mumbai, for an offsite meeting at a whopping cost. One year is indeed a long time in financial markets!