Sharekhan, the retail broking arm of BNP Paribas , has asked over 400 employees to leave the firm, said people familiar with the development. A shift to online broking model and shrinking revenues have prompted the brokerage to cut staff cost, they said.“Nearly 400 employees have been asked to go and more will be asked to go over the next few weeks,” said one of the person cited above. Most of the executives who have been asked to leave are part of sales and support functions, the person said.In response to an email query, a Sharekhan spokesperson said about 350 employees have been asked to quit.“Our business is evolving to meet the more complex needs of our clients, including through the provision of value-added advisory services where we have been hiring. In line with our clients’ expectations, we have also moved to provide more digital services,” the company spokesperson said. “Through this digitalization and restructuring, which is ongoing and will continue in a phased manner over the next few months, around 350 colleagues are impacted.”The firm did not comment whether more employees would be asked to go. Industry officials said Sharekhan had a staff strength of about 3000 employees before the latest round of sacking. This could not be independently verified.A change in Sharekhan’s growth strategy from a franchise-based model to a digital platform triggered the retrenchments at the firm. Insiders said the traditional broking model was struggling to remain profitable because of stiff competition from discount broking firms.In the franchise model, Sharekhan was facing challenges to comply with the rules, which was frowned upon by its French parent BNP.Sharekhan was acquired by BNP in November 2016 from a clutch of private equity firms.Industry officials said rising costs and falling revenues are squeezing broking firms.“The cost, especially from the tech side and compliance related, has gone up drastically in the last few years while the yield has dropped massively because of the discount broking firms,” said Arindam Chanda, CEO, IIFL Securities. “Further, the carnage in mid- and small-cap stocks since January 2018 has forced retail investors to sit on the sidelines."While the Sensex has gained 15 per cent since January 2018, BSE’s Mid-cap and Small-cap indices have dropped 19 per cent and 30 per cent, respectively, during the same period.Stock broking firms have been struggling in the past few quarters because of adverse market conditions. Motilal Oswal Fiancial Services’ trailing 12-months net profit declined 46 per cent while Geojit Financial Services reported a decline of 61 per cent in the trailing 12-months ended June 2019. Emkay Global’s net profit declined over 70 per cent in the 12- months ended June 2019 over the corresponding previous period.