For the new liberalized workforce in India, the impact of words like recession, slowdown, weak economic outlook were alien terms not fully understood.
Socialist India was kept insulated (if not insular) by import substitution policies and macroeconomic policies aimed at keeping the broad contours of the economy stable. This is not to suggest that India, prior to the liberalization reforms of the 90’s was a beacon of stability.
Crisis after crisis, often global in nature routinely struck the nation from independence till the 1990’s. Remarkably all these crises were dealt with a remarkable myopic view which paved the way for the worst ‘shock’ of 1991 when the conflict in Iraq flared up along with oil prices.
Post the ‘liberating’ Liberalization reforms of 1991, the Indian economy became fully integrated with the world economy. The software boom, whose seeds were sown in the late eighties was the recipient of a large pool of qualified engineers at a very cheap price.
Multinationals entered the country primarily in IT, ITES and in manufacturing.
The number of engineering colleges across the country soared, and with it the MBA colleges followed suit.
The problem with any economy being too closely aligned with the world economy in general and the US economy in particular (as was the case with the Indian economic boom, in which the middle class participated in the boom led by start-ups in the IT industry), is that any slowdown, recession or worse, a depression in the world economy (or the US economy) will have significant linkages-these linkages will be strong enough to stall growth and affect employment.
If the 1990’s saw a heady growth in almost all industries and sectors across the country-primarily in real estate which was driven by new found IT wealth in the form of generous stock options and higher salaries to the middle class which simply flocked to the realtors with their surplus savings.
As the US economy grew, albeit at a pace and rate slower than the previous decades, American companies increased spending on services which were offered by India and Indian companies primarily in IT, ITES and BPO.
Unknown to all, the US was heading towards an Armageddon of infinite proportions. The US banking and financial services industry was in the midst of a severe whirlpool of bad debts and stuck in a quagmire of financial instruments often knows as ‘financial weapons of mass destruction’.
The financial ‘meltdown’ so to speak, was long in the coming, but a gradual slowdown in the US economy hurt India in more ways than one can imagine.
The reduced spending on budgets meant narrower margins for the firms servicing US clients in India. Combined with the immense competition among all the companies based in India to serve the US customers, this resulted in severe pressures on earnings (Infosys is a case in point).
Finally on that fateful day in September 2008, the unthinkable happened. Lehman Brothers, which had weathered every recession and economic downturn filed for bankruptcy. The ensuing weeks and months saw many marquee names lining up for Federal government support.
While, we in India had to update our lexicons which had to keep pace with the new harsh reality-Recession and Global Economic Meltdown.
The slowdown in the US based on a few financial instruments had a rippling effect on all sectors, and India’s most sensitive sector-Banking was not spared either.
For students of MBA or for that matter for any batch of students passing out in such a year would be traumatic. How then should the average Joe deal with a recession in India?
Though not adopted by Indian companies wholeheartedly, layoffs have become common.
For starters, it helps in preparing ourselves for the worst. Invariably the economy is usually cyclical, and the bad times won’t last. Companies, when they look to fire employees, look for the ones who have are the most vulnerable-the ones who have performed the worst in the past years, or those in need of a so called ‘Performance improvement Plan’.
In case of these external situations, it always helps to pull up our socks and get to work right away. No company will fire a valuable employee, it is the departments and people whom the company carried in the hope of a better future performance will be sacrificed.
It is important to ensure our performance is always upto the mark, and if it is not, it must be followed by introspection so as to find out the probable causes.
One of the most important things which differentiate any employee who rises fast as opposed to people struggling, is skills.
Skills are not taught officially or formally, not even in the MBA! Skills have to be developed by us constantly through research and updating ourselves with the latest on goings in every field, not only the ones in which we are working in.
Skill development not includes or calls for further formal education or getting more degrees. It calls for all individuals to constantly update their knowledge bank, and pushes us all to go in for new jobs and new companies in which we interact with new people and most importantly learn new things.
MBA’s are groomed for all sectors of the economy and we must take full use of this. When the going is good, we are usually complacent in our jobs and don’t move out as frequently as we should.
Networking, often misconstrued, is one of the tools which help us stay in touch with people from different backgrounds and industries-it is these contacts or their knowledge which helps us overcome difficult times.
As MBA’s we are taught a variety of subjects as well as the course calls for a grueling phase of assignments. it is these sessions and our preparations which will stand in good stead for us during our own bad times.
We, as MBA’s who have not only got the degree in letter but also in spirit must realize and understand the cyclical rough patches in the economy call for our ingenuity in resolving and facing these crises.
The faster we understand and identify our failings, the better it is for us, in the long run.
Contributed By : Sunil Iyer ( Class of 2008, IBS Gurgaon).