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Global Recession in India
Global Recession in India
Global Recession in India
OF
GLOBAL RECESSION
ON
INDIA
Introduction
Fear of a recession looms over the United
States, whenever the US sneezes, the world
catches a cold.
RECESSION
DEPRESSION
LOW
OVER
CONFIDENCE
PRODUCTION
LEVEL
Stock markets &
Recession
Stock markets reflect the buoyancy of the
economy.
Recession is yet to be declared by the Bureau of
Economic Analysis
Indian stock markets also crashed due to a
slowdown in the US economy.
Markets bounced back after the US Fed cut
interest rates
Current crisis in the
US
Defaults on sub-prime mortgages have led to a
major crisis in the US.
Sub-prime is a risky debt offered to people with
poor credit or unstable incomes.
Major Banks landed in trouble after people
could not pay back loans.
Housing market soared on the back of easy
availability of loans
Current crisis in the US
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Impact of an Global
Recession on India
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Mental Meltdown
Shrinking jobs and Pay cuts owing to recession
have taken heavy toll on mental health of India’s
high-profile work force
Dr. Jitendra Nagpal, physiatrist says the majority
of those people are 25-30 age group
symptoms are loss of appetite, irritability, long
spells of silence, lack of communication with
family and friends and absenteeism
Mental Meltdown
Although no empirical data are available on how
many people affected from recession and
suffering from work-related stress.
But increase in number of cases is a matter of
concern for both organizations and families.
Nagpal says this is due to unable to face realities
of failure, which develops a fear for work, he
believes this is mainly due to the lay off and fear
of losing the job.
Hard challenges IT-
BPO services
Confidence levels appear to be at an all
time low in IT industry
2001-03 slowdowns in the US economy saw
the world embrace the off shoring of IT and
BPO services like never before.
Current recession threatens to reverse much
of that, with protectionism gaining ground in
the US.
Hard challenges IT-
BPO services
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2008
2007
2009 Proj
Hard challenges IT-BPO
Out of America
Old bugbear, protectionist legislation, has come
back to haunt the industry
Now $52 billion Indian IT services juggernaut is
worried.
US Senate voted to restrict the hiring of foreign
workers (H-1B visa holders) by banks that are
receiving government bailouts under the
Troubled Assets Relief Program (TARP).
Out of America
The recession has forced the US to become
protectionist
"Most Fortune 100 companies have a large
portion of their business outside the US.
This will restrict them to do most of the
company to outsource and this will create lot
of job opportunities for Americans.
Bad protection
Protectionism will be bad for both the US and
India
The Smoot-Hawley Tariff Act of 1930 is an
example of how a recession deepen to a
depression.
Economists now believe that the Great
Depression was deepened as a result of this
legislation.
Again a similar situation could arise now.
Counter strategy
There is already a shift in business strategies of
corporate India
Large IT and BPO firms have started looking at
other markets like Europe, and even the domestic
market.
Indian companies will have to adopt a multi-
pronged strategy
In case of a full US recession, the onsite staffing
business will see a decline in sales and profit.
Counter strategy
Recessions at this juncture may not last for more
than two to three years
Smart companies will continue investments to
take advantage when recession ends.
India will have to spend a lot more to develop
market and supply chain links in alternate
markets like Asia and Europe.
Experts say the export dependent sectors need to
re-focus on local demand and income from non-
dollar economies.
Can India be a market
option?
IT firms can definitely find a market in India
India has a huge, small and medium enterprise
base and it is the right time to tap this segment.
As for automotive components, consumer
electronics and mobile devices, they have already
found a market in India
They have also started looking at tie-ups in China
and other BRIC countries.
Consequences of Global
recession on India job
market
Worst affected because of Global recession will
be service industry of India
Service industry contributes about 52% to India's
GDP growth.
People may say that there is going to be a huge
job loss due to recession
There is no threat to the skilled people
NASSCOM said India will have a shortage of
about 5 million skilled people in IT/ITeS
Consequences of Global
recession on India job
market
India's travel, tourism and power industry is
going to grow at a better rate.
India has a huge population so a huge
consumer base so we don’t have to always
depend on US for our growth
India's GDP is expected to grow at the rate
of 8.5-8.9 % which is again way above the
growth rate of US
Consequences of Global
recession on India job
market
Its time to be innovative and more effective to
increase the over all efficiency and go for systematic
cost cutting to balance the rupee effect.
In West Africa goods at departmental stores are sold
at the rate 5 times than Indian price and Indian
goods
It’s an excellent opportunity for our exporters.
Conclusion
The overall impact of a Global slowdown on
India would be minimal
Unlike the rest of Asia, India is a strong domestic
demand story
So any slowing in the US is likely to have a more
muted impact on India.
Strong growth in domestic consumption and
significant spending on infrastructure are the two
pillars of India’s growth story
Conclusion
Corporate India is also learning to master the
art of efficient capital management and
delivery of value-added services to sustain
profit margins.
Interest rates are expected to be stable
primarily due to control over inflation and
proactive measures undertaken by the RBI.
Conclusion
The electoral mandate may force a course
correction.
The intervening period of more than three
months can be one in which the economy
and mass livelihoods suffer damage that can
take too long to repair.
Conclusion
HOPING THIS TIME RECESSION
VANISHES SOON SO THAT INDIA
GETS BACK TO ITS STRONGER GDP
GROWTH RATE OF 8% TO 10%
(THOUGH THE EXPERSTS SAY IT
WILL LAST TILL Q3 OF 2009)
THANK YOU