The Indian Connection

"India is an abstraction...India is no more a political personality than Europe. India is a geographical term. It is no more a united nation than the Equator."

Winston Churchill, speaking at the Royal Albert Hall, London on March 18, 1931

Churchill's comment was embedded in a colonial era long past. He could not have forseen how the world would change - the English empire collapse in full force by the 1960s and how the tech boom of the 1999/2000 era would vault the Indian economy and its skilled workforce into the limelight.

In the hedge fund space, Indians have become a powerful intellectual and economic force. Of approximately 400,000 or so employees in New York alone in 2003/4, this author estimates that as many as 10-15% comprise American-Indian workers. So they make up an important employee pivot point underpinning the whole industry.

Briefly, Indian's impact in the workforce quickly moved out of the I.T. programming back-office into the trading and dealing arena to running hedge funds by the late 1990s.

Of course, the recent notable illegal trading accusations aimed at the CEO of Galleon, a long short equity hedge fund manager, brought to the fore just how powerful and meaningful the Indian diaspora has become in the industry, especially when it comes to information networking in certain strategic and associated industries.

And given the large number of high qualified Indian graduates emanating from top-tier Indian and western business schools it is not a stretch to assume that over the next 10 years the number of Indians in the hedge fund industry will increase to 20-25%?

This should not and cannot be ignored by those interested in increasing the numbers of highly skilled (and highly paid) workers into a prospective financial workforce. Certainly, every global location should be paying attention, including those locations that are not necessarily on the list today.

Of course, it impacts immigration policy among other things so don't be surprised to see increasing numbers of Indian I.T. professionals getting visas to work in Switzerland. Of course, the Japanese should be doing the same to encourage a "brain/talent-flood " into their own moribund financial industry!

The demographic change ignores the additional impact that India will inevitably have as a source of alpha (as markets continue to de-regulate) as well as being signficant institutional investors. The first stage will be their impact through funneling the signifcant wealth of Indian entrepreneurs, industrialists and foundations and endowments.

We might be talking about as much as $3 trillion in investable assets. The Indian Summer for the hedge fund industry may already be here, with a Chinese version not too far away. Mahalo.