National Conference on

Global Recession and its impact on India

Employment in IT sector.
Introduction:
India was facing the position of recession as globalization was showing its
negative scenario. The current global economic slowdown has its epicenter
in the United States (US) but the contagion is being witnessed in all major
economies of the world. What started as a shock in the financial markets
has spread to all sectors of the world
Several countries are experiencing rapid contraction in their Global
Domestic Product, rising unemployment levels and an overall slowdown in
the pace of investment activity.
India’s economy has been fuelled by the growth in the technology sector in
the recent past.
 What Is Recession ?
A Recession is a contraction phase of the business cycle.
 National Bureau of Economic Research (NBER) is the
official agency in charge of declaring that the economy is in a state
of recession.
What Causes Recession ?
 An economy typically expands for 6-10 years
and tends to go into a recession for about 6
months to 2 years.
 A recession normally takes place when
consumers loose confidence in the growth of
the economy and spend less.
 This leads to a decreased demand for goods
and services, which in turn leads to decrease
in production lay-offs, and sharp rise in
unemployment.
US Crisis Hits India
 US faced major crisis because of –
 Mortgage Crisis (home loan defaulters)

 Rising Oil Prices.

 High unemployment rates.

 Declining dollar value.

All this slowed down the

growth of the economy
Impact on India

 A slowdown in the US economy is bad news

for India because :
 Indian companies have major outsourcing
deals from the USA.
 India's exports to the US have also grown
substantially over the years.
Anatomy of the economic depression in
India
 Share Market
 More people have sold the shares in the
Indian share market. This has added to the
fall of sensex to lower points.
 Foreign investors have pulled out from the
stock market leading to heavy losses in
stock.
Structure of the global IT industry

 The global IT industry has matured over the years and

has emerged to be a chief contributor to the global
economic growth.
 The IT-ITES industry in India has today become a
growth engine for the economy, contributing substantially
to increases in the GDP, urban employment and exports,
to achieve the vision of a powerful
 and resilient India.
Performance of the Indian IT-ITES
industry
 The information technology sector has been playing a key role in
fuelling the Indian economic performance.
 India’s total IT industry’s (including hardware) share in the global
market stands at 7%; in the IT segment the share is 4% while in the
ITES space the share is 2%.The industry is dominated by large
integrated players consisting of both Indian and international service
providers
Impact of the Recession on IT Sector
in the Indian Economy
 The current global economic slowdown has made it a
roller coaster ride for the world economies. India being
one of the world’s fastest-growing tech markets, thriving
mainly on exports is also experiencing the tremors of the
global economic crisis .

 The booming Indian IT sector is set for a slower growth

in the current fiscal due to global economic slowdown,
surge in crude oil prices and lower technology spending
in the US. Large IT services players will be able to cope
with tighter client spends, but it's the smaller IT
companies which will face the heat.
Top 5 IT Companies who survived
during Recession
Opportunities in India due to US
Recession
 US recession may be a boon for Indian offshore
software companies.
 The impact of recession is higher to small and
medium sized (SMEs) enterprises whose bottom
lines get squeezed due to lack of spending by
consumers.
 SMEs in the US are under severe pressure to
increase profitability and business margins to
survive. This will force them to outsource and even
have M&A arrangements with Indian firms.
RECESSION GOOD FOR INDIA

 The impact of global recession on Indian IT industry will be short

term and industry will not be laying off people in huge numbers,
promises president Nasscom
 , It( Recession) will have short term impact. The growth will be
on track this year and next year.
 Obama will find India as of solution not problem. Barack Obama,
will find Indian IT industry as part of solution to fix US economy
rather than a problem.
 Unemployment is removed by creating jobs and jobs are created
when there is economic activity. We are part of solution as we
help businesses transform, help them become more competitive
and win more business.
Corrective Steps to Check Recession

 In the IT sector, there should be correction in

salary offerings rather than job cutting.
 Public should spend wisely and more .
 Taxes including excise duty and custom duty
should be reduced to lighten the adverse
effect of economic crunch on various
industries.
On this issue Mr. Manmohan Singh
suggested.
 It( Recession) would also send a strong signal to investors around
the world. It may be viewed as a Risky in some situations, but if we
are indeed on the brink of the worst downturn since the Great
Depression, the risk may be worth taking,” he added
Conclusion:
 In today’s economy job security isn’t going to be the
same as employment security. When the economy
consist of government and other public sector jobs,
job security (not getting sacked) was high, but
employment security (finding a new job if you were
sacked) was low. In the new economy, the reverse
will be true – people will get sacked more easily
than before, but they will also find a new job more
easily than before. For the moment, the job market
appears expanding and employment will be back
again on the same track.
 “Do not make Recession your Obsession;
just remember to forget it and you will be
OK.”- Mina Tadros.
 Presented by,
 Priyameet Kaur Keer,
 Lecturer
 Guru Nanak Institute of Engineering &
Technology, Nagpur.