Foreign brokerage CLSA has given the pink slip to 10 employees from its India office last week as slowdown hits their brokerage and investment banking business, sources said.

The brokerage, owned 65% by Credit Agricole, France’s largest retail banking group, has shut down its newly formed India Reality Research (IRR) unit and its investment banking division.

“We do not comment on rumours or staff movements,” a CLSA spokesperson said in an email reply, when asked about the move. CLSA had expanded its Indian investment banking division in 2007, appointing J Niranjan as its managing director and co-head of investment banking.

The IRR unit was formed in 2011 modelled on the brokerage’s China Reality Research and was responsible for collecting and analysing grassroots data from across the country and identifying key trends.

Consultants say ballooning employee costs is forcing brokerages to trim business.

?For many foreign institutional research firms and investment banks, employee cost is huge and unless they are not directly contributing to the topline, companies will look at layoffs,? says Rohit Bammi, partner, financial risk management at consulting firm KPMG India Pvt Ltd. ?Every firm enters a country with a perspective of returns and when they do not see that coming, the cost pressure rises.?

But, brokerages hire employees as economy rises to cover more stocks. ?In 2007-08, brokerages covered 400 stocks, but trimmed to 100 in 2008 after the collapse of Lehman Brothers, ?says Bammi of KPMG. ?Many firms cut the research coverage during the 1997-98 Asian financial crisis but again started adding employees for additional coverage in 2002-2004.

Brokerages started to cut costs in the second half of calendar year 2011. Global investment banks in India, Nomura and Credit Suisse, trimmed staff after a dismal second quarter in 2011. In April this year, Bank of America Merrill Lynch laid off staff at its wealth management division. The bank has now reportedly put its Indian wealth management unit on sale, along with its other non-US wealth management businesses.

In 2007, CLSA?s India country head H Nemkumar, sales director Bharat Parajia and two other executives joined India Infoline, a domestic brokerage.