The Indian auto component industry, with exports of $3.6 billion in 2007-08 of a total turnover of $18 billion, is on a bumpy ride with the big auto makers in the US and in Europe slowing down due to the recession. J S Chopra, president of the Automotive Component Exporters Association (ACMA) and Delphi-TVS Diesel Systems Ltd tries to explain the uncertain road ahead to Suman Rao
Q. According to ACMA, exports grew from $2.8 billion in 2006-07 to $3.6 billion in 2007-08, and constituted 20.1 per cent of the total industry turnover. Considering the slowdown in the US auto industry what will be the impact on the Indian component industry?
A. It is extremely difficult to quantify the impact of the slowdown of the US auto industry on the Indian component industry. We are on a week-to-week schedule and there’s no visibility. People are exporting to the big players like GM, Ford and Chrysler. As we don’t know what they will produce, we don’t know what to expect. That’s why we can’t quantify.
Q. Exports have been growing at a CAGR of 35 per cent during 2002-07 and are estimated to grow at a CAGR of 24 per cent during 2007-2015 to touch $20 billion to $22 billion by 2015-16. Now, can this figure be sustained? Or, is there a need to revise these projections?
A. Now, the big issue is of normalcy and nobody seems to know when the industry will return to normalcy. There’s so much uncertainty. Recession has been declared in the US, Europe and Japan. So, when we will pull out of the financial crisis is the only concern. For instance, companies in Japan are already talking of mergers - small companies merging with the big ones etc. Also, Toyota has reported a first-ever loss and Honda has announced that it is pulling out of the F1 racing. These are indications of an industry in turmoil. Unless this is sorted out and some clarity emerges, we cannot make any projections.
Q. Recently the $14 bn package to bail out the big three of the US auto industry GM, Ford and Chrysler - has been rejected by the Senate. What is the road ahead for the US auto industry and consequently for the Indian auto component exporters who are dependent on that market?
A. Frankly I don’t know. Though the package has been rejected, they got something. They are kind of bailed out till March. There’ll be some clarity once the new government takes office and announces its policy.
Q. Often, when exports slowdown, the industry turns to the domestic market. Now the Indian auto market too has hit a rough patch. So, what’s the way out for the component industry?
A. The difference between this and the previous problem is: it is not a regional problem but a global issue. Survival for the next year is the immediate concern. We’ve to first tighten our belts to preserve cash. Cutting costs, deferring capex plans and bringing down everything to a lower level is what needs to be done. That includes cutting down on manpower and even man-days and keeping inventories close to zero. You’ve to do everything in line with the new demands. For instance, Tata Motors have cut down on man-days. Similarly, Maruti and Hyundai have announced production cuts. Component suppliers have to do the same thing. They have to follow the auto manufacturers.
Monday, December 29, 2008
Component Suppliers Have to Follow Auto Manufacturers
The Indian auto component industry, with exports of $3.6 billion in 2007-08 of a total turnover of $18 billion, is on a bumpy ride with the big auto makers in the US and in Europe slowing down due to the recession. J S Chopra, president of the Automotive Component Exporters Association (ACMA) and Delphi-TVS Diesel Systems Ltd tries to explain the uncertain road ahead to Suman Rao
Q. According to ACMA, exports grew from $2.8 billion in 2006-07 to $3.6 billion in 2007-08, and constituted 20.1 per cent of the total industry turnover. Considering the slowdown in the US auto industry what will be the impact on the Indian component industry?
A. It is extremely difficult to quantify the impact of the slowdown of the US auto industry on the Indian component industry. We are on a week-to-week schedule and there’s no visibility. People are exporting to the big players like GM, Ford and Chrysler. As we don’t know what they will produce, we don’t know what to expect. That’s why we can’t quantify.
Q. Exports have been growing at a CAGR of 35 per cent during 2002-07 and are estimated to grow at a CAGR of 24 per cent during 2007-2015 to touch $20 billion to $22 billion by 2015-16. Now, can this figure be sustained? Or, is there a need to revise these projections?
A. Now, the big issue is of normalcy and nobody seems to know when the industry will return to normalcy. There’s so much uncertainty. Recession has been declared in the US, Europe and Japan. So, when we will pull out of the financial crisis is the only concern. For instance, companies in Japan are already talking of mergers - small companies merging with the big ones etc. Also, Toyota has reported a first-ever loss and Honda has announced that it is pulling out of the F1 racing. These are indications of an industry in turmoil. Unless this is sorted out and some clarity emerges, we cannot make any projections.
Q. Recently the $14 bn package to bail out the big three of the US auto industry GM, Ford and Chrysler - has been rejected by the Senate. What is the road ahead for the US auto industry and consequently for the Indian auto component exporters who are dependent on that market?
A. Frankly I don’t know. Though the package has been rejected, they got something. They are kind of bailed out till March. There’ll be some clarity once the new government takes office and announces its policy.
Q. Often, when exports slowdown, the industry turns to the domestic market. Now the Indian auto market too has hit a rough patch. So, what’s the way out for the component industry?
A. The difference between this and the previous problem is: it is not a regional problem but a global issue. Survival for the next year is the immediate concern. We’ve to first tighten our belts to preserve cash. Cutting costs, deferring capex plans and bringing down everything to a lower level is what needs to be done. That includes cutting down on manpower and even man-days and keeping inventories close to zero. You’ve to do everything in line with the new demands. For instance, Tata Motors have cut down on man-days. Similarly, Maruti and Hyundai have announced production cuts. Component suppliers have to do the same thing. They have to follow the auto manufacturers.
Q. According to ACMA, exports grew from $2.8 billion in 2006-07 to $3.6 billion in 2007-08, and constituted 20.1 per cent of the total industry turnover. Considering the slowdown in the US auto industry what will be the impact on the Indian component industry?
A. It is extremely difficult to quantify the impact of the slowdown of the US auto industry on the Indian component industry. We are on a week-to-week schedule and there’s no visibility. People are exporting to the big players like GM, Ford and Chrysler. As we don’t know what they will produce, we don’t know what to expect. That’s why we can’t quantify.
Q. Exports have been growing at a CAGR of 35 per cent during 2002-07 and are estimated to grow at a CAGR of 24 per cent during 2007-2015 to touch $20 billion to $22 billion by 2015-16. Now, can this figure be sustained? Or, is there a need to revise these projections?
A. Now, the big issue is of normalcy and nobody seems to know when the industry will return to normalcy. There’s so much uncertainty. Recession has been declared in the US, Europe and Japan. So, when we will pull out of the financial crisis is the only concern. For instance, companies in Japan are already talking of mergers - small companies merging with the big ones etc. Also, Toyota has reported a first-ever loss and Honda has announced that it is pulling out of the F1 racing. These are indications of an industry in turmoil. Unless this is sorted out and some clarity emerges, we cannot make any projections.
Q. Recently the $14 bn package to bail out the big three of the US auto industry GM, Ford and Chrysler - has been rejected by the Senate. What is the road ahead for the US auto industry and consequently for the Indian auto component exporters who are dependent on that market?
A. Frankly I don’t know. Though the package has been rejected, they got something. They are kind of bailed out till March. There’ll be some clarity once the new government takes office and announces its policy.
Q. Often, when exports slowdown, the industry turns to the domestic market. Now the Indian auto market too has hit a rough patch. So, what’s the way out for the component industry?
A. The difference between this and the previous problem is: it is not a regional problem but a global issue. Survival for the next year is the immediate concern. We’ve to first tighten our belts to preserve cash. Cutting costs, deferring capex plans and bringing down everything to a lower level is what needs to be done. That includes cutting down on manpower and even man-days and keeping inventories close to zero. You’ve to do everything in line with the new demands. For instance, Tata Motors have cut down on man-days. Similarly, Maruti and Hyundai have announced production cuts. Component suppliers have to do the same thing. They have to follow the auto manufacturers.
Component Suppliers Have to Follow Auto Manufacturers
The Indian auto component industry, with exports of $3.6 billion in 2007-08 of a total turnover of $18 billion, is on a bumpy ride with the big auto makers in the US and in Europe slowing down due to the recession. J S Chopra, president of the Automotive Component Exporters Association (ACMA) and Delphi-TVS Diesel Systems Ltd tries to explain the uncertain road ahead to Suman Rao
Q. According to ACMA, exports grew from $2.8 billion in 2006-07 to $3.6 billion in 2007-08, and constituted 20.1 per cent of the total industry turnover. Considering the slowdown in the US auto industry what will be the impact on the Indian component industry?
A. It is extremely difficult to quantify the impact of the slowdown of the US auto industry on the Indian component industry. We are on a week-to-week schedule and there’s no visibility. People are exporting to the big players like GM, Ford and Chrysler. As we don’t know what they will produce, we don’t know what to expect. That’s why we can’t quantify.
Q. Exports have been growing at a CAGR of 35 per cent during 2002-07 and are estimated to grow at a CAGR of 24 per cent during 2007-2015 to touch $20 billion to $22 billion by 2015-16. Now, can this figure be sustained? Or, is there a need to revise these projections?
A. Now, the big issue is of normalcy and nobody seems to know when the industry will return to normalcy. There’s so much uncertainty. Recession has been declared in the US, Europe and Japan. So, when we will pull out of the financial crisis is the only concern. For instance, companies in Japan are already talking of mergers - small companies merging with the big ones etc. Also, Toyota has reported a first-ever loss and Honda has announced that it is pulling out of the F1 racing. These are indications of an industry in turmoil. Unless this is sorted out and some clarity emerges, we cannot make any projections.
Q. Recently the $14 bn package to bail out the big three of the US auto industry GM, Ford and Chrysler - has been rejected by the Senate. What is the road ahead for the US auto industry and consequently for the Indian auto component exporters who are dependent on that market?
A. Frankly I don’t know. Though the package has been rejected, they got something. They are kind of bailed out till March. There’ll be some clarity once the new government takes office and announces its policy.
Q. Often, when exports slowdown, the industry turns to the domestic market. Now the Indian auto market too has hit a rough patch. So, what’s the way out for the component industry?
A. The difference between this and the previous problem is: it is not a regional problem but a global issue. Survival for the next year is the immediate concern. We’ve to first tighten our belts to preserve cash. Cutting costs, deferring capex plans and bringing down everything to a lower level is what needs to be done. That includes cutting down on manpower and even man-days and keeping inventories close to zero. You’ve to do everything in line with the new demands. For instance, Tata Motors have cut down on man-days. Similarly, Maruti and Hyundai have announced production cuts. Component suppliers have to do the same thing. They have to follow the auto manufacturers.
Q. According to ACMA, exports grew from $2.8 billion in 2006-07 to $3.6 billion in 2007-08, and constituted 20.1 per cent of the total industry turnover. Considering the slowdown in the US auto industry what will be the impact on the Indian component industry?
A. It is extremely difficult to quantify the impact of the slowdown of the US auto industry on the Indian component industry. We are on a week-to-week schedule and there’s no visibility. People are exporting to the big players like GM, Ford and Chrysler. As we don’t know what they will produce, we don’t know what to expect. That’s why we can’t quantify.
Q. Exports have been growing at a CAGR of 35 per cent during 2002-07 and are estimated to grow at a CAGR of 24 per cent during 2007-2015 to touch $20 billion to $22 billion by 2015-16. Now, can this figure be sustained? Or, is there a need to revise these projections?
A. Now, the big issue is of normalcy and nobody seems to know when the industry will return to normalcy. There’s so much uncertainty. Recession has been declared in the US, Europe and Japan. So, when we will pull out of the financial crisis is the only concern. For instance, companies in Japan are already talking of mergers - small companies merging with the big ones etc. Also, Toyota has reported a first-ever loss and Honda has announced that it is pulling out of the F1 racing. These are indications of an industry in turmoil. Unless this is sorted out and some clarity emerges, we cannot make any projections.
Q. Recently the $14 bn package to bail out the big three of the US auto industry GM, Ford and Chrysler - has been rejected by the Senate. What is the road ahead for the US auto industry and consequently for the Indian auto component exporters who are dependent on that market?
A. Frankly I don’t know. Though the package has been rejected, they got something. They are kind of bailed out till March. There’ll be some clarity once the new government takes office and announces its policy.
Q. Often, when exports slowdown, the industry turns to the domestic market. Now the Indian auto market too has hit a rough patch. So, what’s the way out for the component industry?
A. The difference between this and the previous problem is: it is not a regional problem but a global issue. Survival for the next year is the immediate concern. We’ve to first tighten our belts to preserve cash. Cutting costs, deferring capex plans and bringing down everything to a lower level is what needs to be done. That includes cutting down on manpower and even man-days and keeping inventories close to zero. You’ve to do everything in line with the new demands. For instance, Tata Motors have cut down on man-days. Similarly, Maruti and Hyundai have announced production cuts. Component suppliers have to do the same thing. They have to follow the auto manufacturers.
IT Majors Eye Japanese Outsourcing
By Sumalatha Rangarajan
After neutralising their mother-tongue accent and mastering the American drawl, Indian geeks are busy learning Japan’s Kanji, Katakana and Hiragana symbols. Reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.
Take the case of Suman Reddy Ragidi, a business analyst of Cognizant. Japanese language training has enabled her to converse with clients both in formal as well as informal situations. “The training has also made it easier for me to understand all project documentation written in Japanese,” says Reddy Ragidi.
On its part, Cognizant runs foreign language training in its offices and its mandatory for employees to enrol in such language courses. “Language is an important aspect of culture and such training is helpful in everyday communication. Importantly, employees are able to articulate their viewpoints to clients,” says K Venkataraman, director of Cognizant.
The Japanese IT services market is valued at $108 billion, according to a recent survey by Nasscom and PricewaterhouseCoopers. India has bagged only 13% of this offshoring pie. Moreover, demand for software is primarily driven by the BFSI (banking, financial, services and insurance) and manufacturing companies which consume 42% of the total IT services.
Another Chennai-based IT player Infoview Technologies, whose business comes fully from Japanese majors, is making sure its employees know Japanese symbols by heart. Around three-fourth of the company’s employees have learnt the language and the top management team which accounts for 10% of the workforce has reached the ‘near native level’ in terms of mastering the language.
The company also recently launched an online Japanese learning software for beginners in India. JWEIC is developed by WEIC Corporation, a Japanese company that is into production and sales of e-learning language and learning management systems. Infoview, which has the rights to sell the software in India and Singapore, is targeting executives and college students alike for the online course. It is targeting 10,000 learners during the first year.
Similarly, Noida-based Nucleus Software which generates half of its revenues from Japan is encouraging its employees to learn the language. “Right now, we are utilising the services of interpreters and translators,” says chief executive and managing director, Vishnu Dusad.
For Indian IT entrepreneurs like Chandrasekaran of Infoview Technologies and Dusad of Nucleus the lure for doing business with ‘The Land of the Rising Sun’ is the importance that the Japanese place to long-term relationships. “It’s tough to crack the market initially. On an average, while it takes three months to close a deal with an American firm, it’s double for Japanese companies,” says Cheran Chandrasekaran, CEO, Infoview Technologies. Adds Dusad, “The main challenge is the language. But once you meet up to their expectations, you can be assured of a fairly long-term relationship with the Japanese.” These businessman are now ensuring that their employees learn the language and don’t say ‘sayanora’ soon.
After neutralising their mother-tongue accent and mastering the American drawl, Indian geeks are busy learning Japan’s Kanji, Katakana and Hiragana symbols. Reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.
Take the case of Suman Reddy Ragidi, a business analyst of Cognizant. Japanese language training has enabled her to converse with clients both in formal as well as informal situations. “The training has also made it easier for me to understand all project documentation written in Japanese,” says Reddy Ragidi.
On its part, Cognizant runs foreign language training in its offices and its mandatory for employees to enrol in such language courses. “Language is an important aspect of culture and such training is helpful in everyday communication. Importantly, employees are able to articulate their viewpoints to clients,” says K Venkataraman, director of Cognizant.
The Japanese IT services market is valued at $108 billion, according to a recent survey by Nasscom and PricewaterhouseCoopers. India has bagged only 13% of this offshoring pie. Moreover, demand for software is primarily driven by the BFSI (banking, financial, services and insurance) and manufacturing companies which consume 42% of the total IT services.
Another Chennai-based IT player Infoview Technologies, whose business comes fully from Japanese majors, is making sure its employees know Japanese symbols by heart. Around three-fourth of the company’s employees have learnt the language and the top management team which accounts for 10% of the workforce has reached the ‘near native level’ in terms of mastering the language.
The company also recently launched an online Japanese learning software for beginners in India. JWEIC is developed by WEIC Corporation, a Japanese company that is into production and sales of e-learning language and learning management systems. Infoview, which has the rights to sell the software in India and Singapore, is targeting executives and college students alike for the online course. It is targeting 10,000 learners during the first year.
Similarly, Noida-based Nucleus Software which generates half of its revenues from Japan is encouraging its employees to learn the language. “Right now, we are utilising the services of interpreters and translators,” says chief executive and managing director, Vishnu Dusad.
For Indian IT entrepreneurs like Chandrasekaran of Infoview Technologies and Dusad of Nucleus the lure for doing business with ‘The Land of the Rising Sun’ is the importance that the Japanese place to long-term relationships. “It’s tough to crack the market initially. On an average, while it takes three months to close a deal with an American firm, it’s double for Japanese companies,” says Cheran Chandrasekaran, CEO, Infoview Technologies. Adds Dusad, “The main challenge is the language. But once you meet up to their expectations, you can be assured of a fairly long-term relationship with the Japanese.” These businessman are now ensuring that their employees learn the language and don’t say ‘sayanora’ soon.
IT Majors Eye Japanese Outsourcing
By Sumalatha Rangarajan
After neutralising their mother-tongue accent and mastering the American drawl, Indian geeks are busy learning Japan’s Kanji, Katakana and Hiragana symbols. Reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.
Take the case of Suman Reddy Ragidi, a business analyst of Cognizant. Japanese language training has enabled her to converse with clients both in formal as well as informal situations. “The training has also made it easier for me to understand all project documentation written in Japanese,” says Reddy Ragidi.
On its part, Cognizant runs foreign language training in its offices and its mandatory for employees to enrol in such language courses. “Language is an important aspect of culture and such training is helpful in everyday communication. Importantly, employees are able to articulate their viewpoints to clients,” says K Venkataraman, director of Cognizant.
The Japanese IT services market is valued at $108 billion, according to a recent survey by Nasscom and PricewaterhouseCoopers. India has bagged only 13% of this offshoring pie. Moreover, demand for software is primarily driven by the BFSI (banking, financial, services and insurance) and manufacturing companies which consume 42% of the total IT services.
Another Chennai-based IT player Infoview Technologies, whose business comes fully from Japanese majors, is making sure its employees know Japanese symbols by heart. Around three-fourth of the company’s employees have learnt the language and the top management team which accounts for 10% of the workforce has reached the ‘near native level’ in terms of mastering the language.
The company also recently launched an online Japanese learning software for beginners in India. JWEIC is developed by WEIC Corporation, a Japanese company that is into production and sales of e-learning language and learning management systems. Infoview, which has the rights to sell the software in India and Singapore, is targeting executives and college students alike for the online course. It is targeting 10,000 learners during the first year.
Similarly, Noida-based Nucleus Software which generates half of its revenues from Japan is encouraging its employees to learn the language. “Right now, we are utilising the services of interpreters and translators,” says chief executive and managing director, Vishnu Dusad.
For Indian IT entrepreneurs like Chandrasekaran of Infoview Technologies and Dusad of Nucleus the lure for doing business with ‘The Land of the Rising Sun’ is the importance that the Japanese place to long-term relationships. “It’s tough to crack the market initially. On an average, while it takes three months to close a deal with an American firm, it’s double for Japanese companies,” says Cheran Chandrasekaran, CEO, Infoview Technologies. Adds Dusad, “The main challenge is the language. But once you meet up to their expectations, you can be assured of a fairly long-term relationship with the Japanese.” These businessman are now ensuring that their employees learn the language and don’t say ‘sayanora’ soon.
After neutralising their mother-tongue accent and mastering the American drawl, Indian geeks are busy learning Japan’s Kanji, Katakana and Hiragana symbols. Reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.
Take the case of Suman Reddy Ragidi, a business analyst of Cognizant. Japanese language training has enabled her to converse with clients both in formal as well as informal situations. “The training has also made it easier for me to understand all project documentation written in Japanese,” says Reddy Ragidi.
On its part, Cognizant runs foreign language training in its offices and its mandatory for employees to enrol in such language courses. “Language is an important aspect of culture and such training is helpful in everyday communication. Importantly, employees are able to articulate their viewpoints to clients,” says K Venkataraman, director of Cognizant.
The Japanese IT services market is valued at $108 billion, according to a recent survey by Nasscom and PricewaterhouseCoopers. India has bagged only 13% of this offshoring pie. Moreover, demand for software is primarily driven by the BFSI (banking, financial, services and insurance) and manufacturing companies which consume 42% of the total IT services.
Another Chennai-based IT player Infoview Technologies, whose business comes fully from Japanese majors, is making sure its employees know Japanese symbols by heart. Around three-fourth of the company’s employees have learnt the language and the top management team which accounts for 10% of the workforce has reached the ‘near native level’ in terms of mastering the language.
The company also recently launched an online Japanese learning software for beginners in India. JWEIC is developed by WEIC Corporation, a Japanese company that is into production and sales of e-learning language and learning management systems. Infoview, which has the rights to sell the software in India and Singapore, is targeting executives and college students alike for the online course. It is targeting 10,000 learners during the first year.
Similarly, Noida-based Nucleus Software which generates half of its revenues from Japan is encouraging its employees to learn the language. “Right now, we are utilising the services of interpreters and translators,” says chief executive and managing director, Vishnu Dusad.
For Indian IT entrepreneurs like Chandrasekaran of Infoview Technologies and Dusad of Nucleus the lure for doing business with ‘The Land of the Rising Sun’ is the importance that the Japanese place to long-term relationships. “It’s tough to crack the market initially. On an average, while it takes three months to close a deal with an American firm, it’s double for Japanese companies,” says Cheran Chandrasekaran, CEO, Infoview Technologies. Adds Dusad, “The main challenge is the language. But once you meet up to their expectations, you can be assured of a fairly long-term relationship with the Japanese.” These businessman are now ensuring that their employees learn the language and don’t say ‘sayanora’ soon.
IT Majors Eye Japanese Outsourcing
By Sumalatha Rangarajan
After neutralising their mother-tongue accent and mastering the American drawl, Indian geeks are busy learning Japan’s Kanji, Katakana and Hiragana symbols. Reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.
Take the case of Suman Reddy Ragidi, a business analyst of Cognizant. Japanese language training has enabled her to converse with clients both in formal as well as informal situations. “The training has also made it easier for me to understand all project documentation written in Japanese,” says Reddy Ragidi.
On its part, Cognizant runs foreign language training in its offices and its mandatory for employees to enrol in such language courses. “Language is an important aspect of culture and such training is helpful in everyday communication. Importantly, employees are able to articulate their viewpoints to clients,” says K Venkataraman, director of Cognizant.
The Japanese IT services market is valued at $108 billion, according to a recent survey by Nasscom and PricewaterhouseCoopers. India has bagged only 13% of this offshoring pie. Moreover, demand for software is primarily driven by the BFSI (banking, financial, services and insurance) and manufacturing companies which consume 42% of the total IT services.
Another Chennai-based IT player Infoview Technologies, whose business comes fully from Japanese majors, is making sure its employees know Japanese symbols by heart. Around three-fourth of the company’s employees have learnt the language and the top management team which accounts for 10% of the workforce has reached the ‘near native level’ in terms of mastering the language.
The company also recently launched an online Japanese learning software for beginners in India. JWEIC is developed by WEIC Corporation, a Japanese company that is into production and sales of e-learning language and learning management systems. Infoview, which has the rights to sell the software in India and Singapore, is targeting executives and college students alike for the online course. It is targeting 10,000 learners during the first year.
Similarly, Noida-based Nucleus Software which generates half of its revenues from Japan is encouraging its employees to learn the language. “Right now, we are utilising the services of interpreters and translators,” says chief executive and managing director, Vishnu Dusad.
For Indian IT entrepreneurs like Chandrasekaran of Infoview Technologies and Dusad of Nucleus the lure for doing business with ‘The Land of the Rising Sun’ is the importance that the Japanese place to long-term relationships. “It’s tough to crack the market initially. On an average, while it takes three months to close a deal with an American firm, it’s double for Japanese companies,” says Cheran Chandrasekaran, CEO, Infoview Technologies. Adds Dusad, “The main challenge is the language. But once you meet up to their expectations, you can be assured of a fairly long-term relationship with the Japanese.” These businessman are now ensuring that their employees learn the language and don’t say ‘sayanora’ soon.
After neutralising their mother-tongue accent and mastering the American drawl, Indian geeks are busy learning Japan’s Kanji, Katakana and Hiragana symbols. Reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.
Take the case of Suman Reddy Ragidi, a business analyst of Cognizant. Japanese language training has enabled her to converse with clients both in formal as well as informal situations. “The training has also made it easier for me to understand all project documentation written in Japanese,” says Reddy Ragidi.
On its part, Cognizant runs foreign language training in its offices and its mandatory for employees to enrol in such language courses. “Language is an important aspect of culture and such training is helpful in everyday communication. Importantly, employees are able to articulate their viewpoints to clients,” says K Venkataraman, director of Cognizant.
The Japanese IT services market is valued at $108 billion, according to a recent survey by Nasscom and PricewaterhouseCoopers. India has bagged only 13% of this offshoring pie. Moreover, demand for software is primarily driven by the BFSI (banking, financial, services and insurance) and manufacturing companies which consume 42% of the total IT services.
Another Chennai-based IT player Infoview Technologies, whose business comes fully from Japanese majors, is making sure its employees know Japanese symbols by heart. Around three-fourth of the company’s employees have learnt the language and the top management team which accounts for 10% of the workforce has reached the ‘near native level’ in terms of mastering the language.
The company also recently launched an online Japanese learning software for beginners in India. JWEIC is developed by WEIC Corporation, a Japanese company that is into production and sales of e-learning language and learning management systems. Infoview, which has the rights to sell the software in India and Singapore, is targeting executives and college students alike for the online course. It is targeting 10,000 learners during the first year.
Similarly, Noida-based Nucleus Software which generates half of its revenues from Japan is encouraging its employees to learn the language. “Right now, we are utilising the services of interpreters and translators,” says chief executive and managing director, Vishnu Dusad.
For Indian IT entrepreneurs like Chandrasekaran of Infoview Technologies and Dusad of Nucleus the lure for doing business with ‘The Land of the Rising Sun’ is the importance that the Japanese place to long-term relationships. “It’s tough to crack the market initially. On an average, while it takes three months to close a deal with an American firm, it’s double for Japanese companies,” says Cheran Chandrasekaran, CEO, Infoview Technologies. Adds Dusad, “The main challenge is the language. But once you meet up to their expectations, you can be assured of a fairly long-term relationship with the Japanese.” These businessman are now ensuring that their employees learn the language and don’t say ‘sayanora’ soon.
STEM-ming Opportunities
By M H Ahssan
CHANGES IN THE INTERNATIONAL ECONOMY HAVE CREATED TREMENDOUS JOB OPPORTUNITIES FOR STUDENTS,WHO HAVE DEGREES IN THE STEM (SCIENCE, TECHNOLOGY, ENGINEERING AND MATHEMATICS) SUBJECTS. TIM ROGERS PRESENTS THE EFFORTS MADE BY INSTITUTIONS AND REGULATORY BODIES TO PROMOTE THE STEM SUBJECTS,AND THE OPPORTUNITIES THAT LIE THEREIN.
With an increasing number of national governments and transnational organisations like the European Union switching their priorities to assist the development of knowledge-focused economies, the emphasis on encouraging more graduate students to opt for Science, Technology, Engineering and Mathematics (the commonly termed STEM group of academic subjects) master’s and PhD degrees, is greater than ever before. The change in popularity has undoubtedly been due, in part, to the expansion of the international technology sector and the re-entrenchment of science and engineering as central to modern economic success.
Excellent employment prospects
As investment in research and development continues to grow and is supported by more open government policies, the growth of the science and technology sectors is likely to continue at an increasing pace over the next 20 to 30 years.
The shift to a more technologically and scientifically driven global economy can only be good news for international graduates in the STEM subjects. With the number of appropriately-qualified STEM graduates below the level of current global demand, employment prospects are buoyant, even in light of the current economic uncertainty. Countries as diverse as China, Denmark, Finland and Malaysia have prioritised so-called innovation strategies to develop their capacity in research and development in the fields of biotechnology, information technology, mobile communications and genetic research, all of which require skilled master’s and PhD graduates. Such demand is likely to only increase.
According to the executive search firm Heidrick and Struggles’s 2007 Mapping Global Talent report, developed in association with the Economist Intelligence Unit, the demographic patterns of China and India, coupled with the countries’ strong focus on the STEM subjects will have a profound impact on both their national and the international labour markets: “We can predict that these two countries will yield an increasing number of talented graduates in the hi-tech sector, given their strong tradition of engineering and science at the university level.”
Attracting STEM graduates
The likelihood of an altered global employment scene is acknowledged by many governments around the world to such an extent that special initiatives to encourage and capture STEM graduates are now commonplace. The UK Government has recently embarked on a number of programmes to encourage more research and development in the STEM subject areas and attract talented master’s and PhD graduates to either come and work in the UK, or to remain in the country after their programme of study has been completed. The UK has similarly extended its focus to securing more STEM graduates through a number of subject-specific projects, all of which have potentially important consequences for international graduate students. One of the projects, ‘Stimulating Physics’, is intended to encourage more students to pursue physics at universities in the UK.
Making STEM subjects central
In India, where the financial liberalisation of the 1990s has underwritten an expansion of almost every sector of the economy, the likes of which have never been seen before, the demand for skilled STEM graduates is already outstripping supply by a clear margin. With so many Indian students pursuing STEM master’s and PhD programmes in countries such as Canada, the UK and the US, it is likely that employment prospects back at home will be at least as competitive as those on offer in the West, as Indian companies compete on the world stage. Indian tech giant, Infosys, employs more than 90,000 people worldwide, 40,000 of whom are based in India, and routinely recruits directly from the campuses of Cal Tech, Imperial College and MIT to ensure its employees are of the very highest calibre. With approximately 12,000 new employees recruited annually by Infosys, 81 per cent of their intake this year will be qualified to a master’s or professional level. Tata Consultancy Services, another Indian IT specialist employer, hired 32,000 new employees in 2007-2008, simply to keep up with their own expansion plans.
A bright future for STEM graduates
Professor Heiko Schröder, Head, Royal Melbourne Institute of Technology’s School of Computer Science and Information Technology, a leading innovator in science and technology programmes, predicts a bright future for those graduating from STEM programmes. He affirms, “Worldwide, there are predictions that tell us that IT will grow again very significantly, and the shortage of jobs in the industry is already apparent, so we expect a growth in student numbers. We also know that industry investment in terms of IT, both computers and software, will grow more than ever before. American predictions are that the spending of companies on computers will grow by a factor of five in the next ten years, and spending on software will multiply by more than a factor of two, and this will make the spending on IT by far the biggest investment that companies have to make.”
A globally mobile workforce
The continuing globalisation of the science and engineering workforce in the US reflects the current broader international trend. As research and development funding crosses national borders, it is logical that the skilled workforce should become more internationally mobile. Conversely, employers now routinely seek candidates that are able to work in a globalised environment, and have experience of studying or working in another country. With the shortage of international talent likely to impact economic growth in industries, in and around the STEM subjects, perhaps there has never been a better time to consider a graduate programme in these areas.
CHANGES IN THE INTERNATIONAL ECONOMY HAVE CREATED TREMENDOUS JOB OPPORTUNITIES FOR STUDENTS,WHO HAVE DEGREES IN THE STEM (SCIENCE, TECHNOLOGY, ENGINEERING AND MATHEMATICS) SUBJECTS. TIM ROGERS PRESENTS THE EFFORTS MADE BY INSTITUTIONS AND REGULATORY BODIES TO PROMOTE THE STEM SUBJECTS,AND THE OPPORTUNITIES THAT LIE THEREIN.
With an increasing number of national governments and transnational organisations like the European Union switching their priorities to assist the development of knowledge-focused economies, the emphasis on encouraging more graduate students to opt for Science, Technology, Engineering and Mathematics (the commonly termed STEM group of academic subjects) master’s and PhD degrees, is greater than ever before. The change in popularity has undoubtedly been due, in part, to the expansion of the international technology sector and the re-entrenchment of science and engineering as central to modern economic success.
Excellent employment prospects
As investment in research and development continues to grow and is supported by more open government policies, the growth of the science and technology sectors is likely to continue at an increasing pace over the next 20 to 30 years.
The shift to a more technologically and scientifically driven global economy can only be good news for international graduates in the STEM subjects. With the number of appropriately-qualified STEM graduates below the level of current global demand, employment prospects are buoyant, even in light of the current economic uncertainty. Countries as diverse as China, Denmark, Finland and Malaysia have prioritised so-called innovation strategies to develop their capacity in research and development in the fields of biotechnology, information technology, mobile communications and genetic research, all of which require skilled master’s and PhD graduates. Such demand is likely to only increase.
According to the executive search firm Heidrick and Struggles’s 2007 Mapping Global Talent report, developed in association with the Economist Intelligence Unit, the demographic patterns of China and India, coupled with the countries’ strong focus on the STEM subjects will have a profound impact on both their national and the international labour markets: “We can predict that these two countries will yield an increasing number of talented graduates in the hi-tech sector, given their strong tradition of engineering and science at the university level.”
Attracting STEM graduates
The likelihood of an altered global employment scene is acknowledged by many governments around the world to such an extent that special initiatives to encourage and capture STEM graduates are now commonplace. The UK Government has recently embarked on a number of programmes to encourage more research and development in the STEM subject areas and attract talented master’s and PhD graduates to either come and work in the UK, or to remain in the country after their programme of study has been completed. The UK has similarly extended its focus to securing more STEM graduates through a number of subject-specific projects, all of which have potentially important consequences for international graduate students. One of the projects, ‘Stimulating Physics’, is intended to encourage more students to pursue physics at universities in the UK.
Making STEM subjects central
In India, where the financial liberalisation of the 1990s has underwritten an expansion of almost every sector of the economy, the likes of which have never been seen before, the demand for skilled STEM graduates is already outstripping supply by a clear margin. With so many Indian students pursuing STEM master’s and PhD programmes in countries such as Canada, the UK and the US, it is likely that employment prospects back at home will be at least as competitive as those on offer in the West, as Indian companies compete on the world stage. Indian tech giant, Infosys, employs more than 90,000 people worldwide, 40,000 of whom are based in India, and routinely recruits directly from the campuses of Cal Tech, Imperial College and MIT to ensure its employees are of the very highest calibre. With approximately 12,000 new employees recruited annually by Infosys, 81 per cent of their intake this year will be qualified to a master’s or professional level. Tata Consultancy Services, another Indian IT specialist employer, hired 32,000 new employees in 2007-2008, simply to keep up with their own expansion plans.
A bright future for STEM graduates
Professor Heiko Schröder, Head, Royal Melbourne Institute of Technology’s School of Computer Science and Information Technology, a leading innovator in science and technology programmes, predicts a bright future for those graduating from STEM programmes. He affirms, “Worldwide, there are predictions that tell us that IT will grow again very significantly, and the shortage of jobs in the industry is already apparent, so we expect a growth in student numbers. We also know that industry investment in terms of IT, both computers and software, will grow more than ever before. American predictions are that the spending of companies on computers will grow by a factor of five in the next ten years, and spending on software will multiply by more than a factor of two, and this will make the spending on IT by far the biggest investment that companies have to make.”
A globally mobile workforce
The continuing globalisation of the science and engineering workforce in the US reflects the current broader international trend. As research and development funding crosses national borders, it is logical that the skilled workforce should become more internationally mobile. Conversely, employers now routinely seek candidates that are able to work in a globalised environment, and have experience of studying or working in another country. With the shortage of international talent likely to impact economic growth in industries, in and around the STEM subjects, perhaps there has never been a better time to consider a graduate programme in these areas.
POTENTIAL TO GROW?
By M H Ahssan
With recession raging in the US, many sectors are now on high alert, cutting costs - and employees. HNN evaluates the economic repercussions across sectors
Barely a year ago, the Indian economy was riding an unstoppable wave. The stock market reflected sentiments across sectors, as it surged forward at a scorching pace. But suddenly, the buoyant wave came crashing down - and took several people with it. As a generation that had received a legacy of opportunities, education and exposure to the world, on a proverbial platter, young students and professionals weren’t quite prepared for the slump.
Today, in a recession-threatened economy, while some sectors have witnessed large-scale layoffs and rising unemployment, others are showing signs of anecdotal downsizing. Here’s a brief update on the sectors that were once hot, and now perhaps, are not.
AVIATION
Although the aviation sector in India climbed to the ninth position in the world aviation market in 2007, 2008 witnessed the aviation sector
battling multiple demons - rising jet fuel prices, and later, the slump in business, as travellers chose cheaper modes of travel under threat of recession.
Kunal Vasudeva, Head, Kingfisher Training Academy, states, “From an output perspective, are most airlines recruiting? The answer is no. Will they recruit in the near future? Hopefully, yes. While earlier, airlines may have recruited 15 students, today just three or four make the cut. However, what’s important is that the current batch of students will graduate next June or July, and hopefully, the economy will tide over by then. The slump we’re witnessing right now is temporary.”
However, things aren’t quite as easy for students, who’ve already graduated. Ratan K* has completed his pilot training course, but has been unable to land a job as a pilot. He says, “There are no openings right now. Although we hope for the situation to improve in a couple of months, the fact is that there are about 6000 people looking for jobs, with maybe about 120 to 130 openings available only.”
BPO
Deepak Kapoor is Founder-CEO of www.bponews.in, and has also served on the board of the Call Centre Association of India and chaired its PR Committee. Kapoor acknowledges that although the sector is growing, it is doing so at a slower pace than before. He explains, “The banks that have been bailed out have to close a lot of bad loans. This process, called foreclosure, involves a great deal of paperwork, as does litigation work, another fallout of bad loans. If you look at operation floor ratios, you will find that the new work coming in is concerned with these two areas. This work is set to increase. Hence, larger companies are still getting a lot of high-value work. The challenge is to get our agents and employees trained in this work that is coming in.”
Kapoor adds that while employees are taking salary cuts of 10 to 15 per cent for a predefined period, there is no real risk to jobs. “You need customer support in various areas. However, selling has gone down, because indiscriminate selling of loans and credit cards is what has got banks into this situation in the first place.”
Vrinda P*, who works with an established BPO in Mumbai reveals, “There has been cost cutting on a large scale. For instance, though transport was available 24 hours a day previously, the schedule has changed to make it available only at certain times of the day. Also the appraisal cycle has changed for junior and mid-level employees from six months to one year.”
FINANCIAL SERVICES
In recent years, a career in the financial sector became the most coveted placement for innumerable MBA graduates, who could expect to land staggering packages, exceeding Rs one crore. However, the collapse of Lehman Brothers started a domino effect across the sector, with some areas being affected more than others.
Jyoti Vij, Director, Financial Sector, Federation of Indian Chambers of Commerce and Industry (FICCI), clarifies, “Insurance may not be as lucrative as it was a few months ago, but it is safer compared to other segments and will experience great growth in the future. Capital markets, brokerage firms and mutual funds are very dicey areas right now. However, private equity is growing fast. I think investment, venture capital, insurance and hedge funds will do well.”
According to Rishi Gupta, Chief Financial Officer, Financial Information Network and Operations (FINO), the economic downturn can be an opportunity for public banks to make a mark. He reveals, “Foreign banks have always been very selective, never indulging in mass recruitment. Moreover, while domestic, private sector banks have always recruited at a very high rate in order to meet the pace of growth, this pace has now slackened. Hence, public sector banks, for which public sentiment has been steadily improving, can now capitalise on this trend. In fact, I believe the State Bank of India has announced its plans to hire some 30,000 people, and UBI and Bank of Baroda are also on the same track.”
HOSPITALITY
Although India as a destination found its place in every tourist’s wishlist in 2007, in 2008, the hospitality sector has to contend with a double whammy - impending recession that cast a gloom over the sector, and then the 26/11 terror attacks that prompted a UK daily to include India in the list of the top 20 most dangerous places to visit, along with war-ravaged nations like Iraq and Afghanistan. However, the situation is not quite as bleak as one may
imagine.
Kanishk Malhotra, Managing Director, Hotel Solutions India, elucidates, “An occupancy of 70 to 80 per cent is generally considered a healthy occupancy level for a hotel, whether budget, luxury, or leisure. So far, according to reports, there has been a 20 per cent dip in the segment. If I have a 500-room hotel, I need a certain number of people to service rooms. If occupancy is down by 20 per cent (100 rooms less), I really don’t gain by terminating 20 to 30 people.”
Malhotra acknowledges though, that there has been a significant reduction in travel, more so in the commercial segment than in the leisure segment. “Companies involved in offshoring, IT, etc, are obviously cutting back on costs. Hence there have been changes in international and domestic travel,” he says.
HEALTHCARE AND PHARMA
As a sector that is driven by need, healthcare has been fairly recession-proof. India acquired the reputation of ‘First-world treatment at Third-world prices’, making it a hotspot for medical tourism. At last count, a US$ 35 billion industry in India, it is however, expected to eventually feel the pinch. Dr Aashish Contractor, Head, Preventive Cardiology and Rehabilitation, Asian Heart Institute, explains, “Healthcare involves a lot of elective procedures, which one does not necessarily have to do. I think ultimately, recession might affect areas that do not deal with lifethreatening problems, like cosmetic surgery or routine health check-ups for instance, which people believe they can postpone.”
A K Jain, Executive Director, Ipca Laboratories, asserts, “Pharma has been recession proof so far, because medicines are a must. You cannot delay treatment if it’s a serious situation. In fact because of lifestyle-related health problems, like stress, there will be more business. There may be some affect felt for three to six months due to currency fluctuations, and companies may delay plans for new investments, due to liquidity issues, but recession will not create a great impact. In fact, pharma companies can capitalise on this situation because production is now cost-effective due to lowered prices at all levels.”
IT & ITes
Instrumental in influencing the way the world today views India and its tremendous mind power, the IT sector placed India at the forefront of the international knowledge economy. The domestic IT market achieved a growth of 43 per cent in the fiscal year 2008, going from US$ 16.2 billion in FY 2007 to US$ 23.1 billion in FY 2008.
This formerly ‘stable’ sector, coveted by students and their parents, the IT sector is known to have taken a beating during the current economic downturn. Since it is exportfocused, the economic turmoil in the US has ensured a few months of uncertainty for the IT industry. At a press conference earlier this month, NASSCOM acknowledged that tech spending had definitely declined, and Som Mittal, President, NASSCOM was compelled to reiterate that the body would have to revise its forecast for the sector for this year (it had previously forecast a revenue growth between 21 and 24 percent to about $50 billion in the year to March 2009).
Ajoy Mukherjee, VP and Head, Global HR, Tata Consultancy Services, avers, “Current conditions are volatile, but we see significant opportunities for growth even in a tough economy. New opportunities are emerging in new growth markets and our services will play a significant role in global economic recovery. We remain cautiously optimistic about the external environment, and our hiring pattern reflects the same. We have added over 18,500 people in the first six months of the current fiscal, and are well on our way to meet our recruitment targets in the current financial year. We have also made over 24,000 campus offers in this year.”
Deepak Deshpande, former President, HR Infotech Association, an association of HR professionals in IT and ITes companies, adds, “According to a research report, there has been a sizable decline in anticipated hiring activity, although there has been no blanket ban on hiring. All said and done, the situation in India is not quite as gloomy as it is across the globe. There is still active hiring happening, and recruiter confidence is strongest in India.”
REALTY
The real estate sector is the second largest employment generator in India, after agriculture, and makes a sizable contribution to the GDP (five per cent). Moreover, it can be credited with the growth of several supporting industries like the cement or steel industries. At last count, the realty sector was enjoying an enviable growth rate of about 35 per cent, and was valued at approximately US$ 15 billion.
Today, the breakdown of the US housing market has spelled trouble for the sector in India. Sanjay Dutt, CEO (Business), Jones Lang LaSalle Meghraj, which offers leasing, consulting, research, and property and development services, asserts, “The residential real estate space has been severely affected because of the combined pressure from high interest rates and high property rates. There is also a slowdown in commercial real estate development, especially with IT, ITes and retail companies that are putting their expansion plans on hold. It is true that employers in the real estate space are letting people go, and this is happening across the board. There is now a liquidity crunch, as well as dwindling demand, making it difficult to complete projects. This is the time for realism. Investors have more or less left the market, leaving only real-end users, who do not buy for speculative purposes, only when there is a genuine need.”
RETAIL
The fifth largest retail destination globally, the Indian retail sector was ranked second after Vietnam as the most attractive, emerging market destination for investment in the retail sector, by AT Kearney’s seventh annual Global Retail Development Index (GRDI), in 2008. Moreover, according to ASSOCHAM, the Indian retail sector touched US$ 300 billion in 2007.
However, industry biggies acknowledged that the retail shimmer has dimmed somewhat,
Sanjay Jog, Chief People Officer, Future Group (Pantaloon, Big Bazaar), admits, “There is a slowdown in recruitment, but recruitment for front end operations (floor manager and below), are in full flow, as much as last year. We are not hiring in certain categories like merchandising, HR, finance, accounting and supply chain management. We had actually frozen recruitment six months ago, before recession, and were leveraging the resources we had.”
Jog clarifies that the value retail side (supermarkets) are not as affected as the lifestyle segment, although there are rationalisation of employee costs, like travelling economy instead of first, or staying at a guest house instead of a hotel. Prof Dr Uday Salunkhe, Group Director, Welingkar Institute of Management, agrees, saying, “Certain verticals within the retail sector may be impacted more so than others. Consumer electronics for instance does not appear to be as affected as the food and grocery segment.”
Nisha S*, who works with a major retail chain, reveals, “There are salary cuts in some organisations, and layoffs in support areas like IT, or in speciality formats, which companies believe are not working out as planned.”
MEDIA
The advertising industry recorded a growth of 22 per cent in 2007 to reach US$ 4.75 billion, contributing 38 per cent of the media and entertainment industry revenues. Abhinav P*, an executive with an international advertising group, presents a heartening picture for the sector, stating, “While market conditions may be adverse, companies are now looking to make more strategic investments in communication, to get people to get out and buy, since buying is, in fact, the only way out of a recession. We believe we’ll see this storm out.”
However, the US$ 5.48 billion TV industry and the US$ 3.62 billion print media segments may not be as fortunate. Dhrishti K*, a sales executive with a major, international television group, reveals, “Business is bad, revenues have dipped tremendously, and recruitment has been frozen, although layoffs haven’t begun yet. There is rumour of newer, smaller channels shutting shop. Media sales is now a tough area because the first place that companies budget is ad expenses. If they first advertised on five channels, they will now divert monies to only two in every genre, and thus, the fight for monies begins.”
No matter the situation with various sectors today, insiders believe that the Indian economy will be able to live out this phase, and when economic conditions improve, start another glorious cycle. What remains for us to do, is to strap in for the ride, and make informed choices while we wait out the storm.
With recession raging in the US, many sectors are now on high alert, cutting costs - and employees. HNN evaluates the economic repercussions across sectors
Barely a year ago, the Indian economy was riding an unstoppable wave. The stock market reflected sentiments across sectors, as it surged forward at a scorching pace. But suddenly, the buoyant wave came crashing down - and took several people with it. As a generation that had received a legacy of opportunities, education and exposure to the world, on a proverbial platter, young students and professionals weren’t quite prepared for the slump.
Today, in a recession-threatened economy, while some sectors have witnessed large-scale layoffs and rising unemployment, others are showing signs of anecdotal downsizing. Here’s a brief update on the sectors that were once hot, and now perhaps, are not.
AVIATION
Although the aviation sector in India climbed to the ninth position in the world aviation market in 2007, 2008 witnessed the aviation sector
battling multiple demons - rising jet fuel prices, and later, the slump in business, as travellers chose cheaper modes of travel under threat of recession.
Kunal Vasudeva, Head, Kingfisher Training Academy, states, “From an output perspective, are most airlines recruiting? The answer is no. Will they recruit in the near future? Hopefully, yes. While earlier, airlines may have recruited 15 students, today just three or four make the cut. However, what’s important is that the current batch of students will graduate next June or July, and hopefully, the economy will tide over by then. The slump we’re witnessing right now is temporary.”
However, things aren’t quite as easy for students, who’ve already graduated. Ratan K* has completed his pilot training course, but has been unable to land a job as a pilot. He says, “There are no openings right now. Although we hope for the situation to improve in a couple of months, the fact is that there are about 6000 people looking for jobs, with maybe about 120 to 130 openings available only.”
BPO
Deepak Kapoor is Founder-CEO of www.bponews.in, and has also served on the board of the Call Centre Association of India and chaired its PR Committee. Kapoor acknowledges that although the sector is growing, it is doing so at a slower pace than before. He explains, “The banks that have been bailed out have to close a lot of bad loans. This process, called foreclosure, involves a great deal of paperwork, as does litigation work, another fallout of bad loans. If you look at operation floor ratios, you will find that the new work coming in is concerned with these two areas. This work is set to increase. Hence, larger companies are still getting a lot of high-value work. The challenge is to get our agents and employees trained in this work that is coming in.”
Kapoor adds that while employees are taking salary cuts of 10 to 15 per cent for a predefined period, there is no real risk to jobs. “You need customer support in various areas. However, selling has gone down, because indiscriminate selling of loans and credit cards is what has got banks into this situation in the first place.”
Vrinda P*, who works with an established BPO in Mumbai reveals, “There has been cost cutting on a large scale. For instance, though transport was available 24 hours a day previously, the schedule has changed to make it available only at certain times of the day. Also the appraisal cycle has changed for junior and mid-level employees from six months to one year.”
FINANCIAL SERVICES
In recent years, a career in the financial sector became the most coveted placement for innumerable MBA graduates, who could expect to land staggering packages, exceeding Rs one crore. However, the collapse of Lehman Brothers started a domino effect across the sector, with some areas being affected more than others.
Jyoti Vij, Director, Financial Sector, Federation of Indian Chambers of Commerce and Industry (FICCI), clarifies, “Insurance may not be as lucrative as it was a few months ago, but it is safer compared to other segments and will experience great growth in the future. Capital markets, brokerage firms and mutual funds are very dicey areas right now. However, private equity is growing fast. I think investment, venture capital, insurance and hedge funds will do well.”
According to Rishi Gupta, Chief Financial Officer, Financial Information Network and Operations (FINO), the economic downturn can be an opportunity for public banks to make a mark. He reveals, “Foreign banks have always been very selective, never indulging in mass recruitment. Moreover, while domestic, private sector banks have always recruited at a very high rate in order to meet the pace of growth, this pace has now slackened. Hence, public sector banks, for which public sentiment has been steadily improving, can now capitalise on this trend. In fact, I believe the State Bank of India has announced its plans to hire some 30,000 people, and UBI and Bank of Baroda are also on the same track.”
HOSPITALITY
Although India as a destination found its place in every tourist’s wishlist in 2007, in 2008, the hospitality sector has to contend with a double whammy - impending recession that cast a gloom over the sector, and then the 26/11 terror attacks that prompted a UK daily to include India in the list of the top 20 most dangerous places to visit, along with war-ravaged nations like Iraq and Afghanistan. However, the situation is not quite as bleak as one may
imagine.
Kanishk Malhotra, Managing Director, Hotel Solutions India, elucidates, “An occupancy of 70 to 80 per cent is generally considered a healthy occupancy level for a hotel, whether budget, luxury, or leisure. So far, according to reports, there has been a 20 per cent dip in the segment. If I have a 500-room hotel, I need a certain number of people to service rooms. If occupancy is down by 20 per cent (100 rooms less), I really don’t gain by terminating 20 to 30 people.”
Malhotra acknowledges though, that there has been a significant reduction in travel, more so in the commercial segment than in the leisure segment. “Companies involved in offshoring, IT, etc, are obviously cutting back on costs. Hence there have been changes in international and domestic travel,” he says.
HEALTHCARE AND PHARMA
As a sector that is driven by need, healthcare has been fairly recession-proof. India acquired the reputation of ‘First-world treatment at Third-world prices’, making it a hotspot for medical tourism. At last count, a US$ 35 billion industry in India, it is however, expected to eventually feel the pinch. Dr Aashish Contractor, Head, Preventive Cardiology and Rehabilitation, Asian Heart Institute, explains, “Healthcare involves a lot of elective procedures, which one does not necessarily have to do. I think ultimately, recession might affect areas that do not deal with lifethreatening problems, like cosmetic surgery or routine health check-ups for instance, which people believe they can postpone.”
A K Jain, Executive Director, Ipca Laboratories, asserts, “Pharma has been recession proof so far, because medicines are a must. You cannot delay treatment if it’s a serious situation. In fact because of lifestyle-related health problems, like stress, there will be more business. There may be some affect felt for three to six months due to currency fluctuations, and companies may delay plans for new investments, due to liquidity issues, but recession will not create a great impact. In fact, pharma companies can capitalise on this situation because production is now cost-effective due to lowered prices at all levels.”
IT & ITes
Instrumental in influencing the way the world today views India and its tremendous mind power, the IT sector placed India at the forefront of the international knowledge economy. The domestic IT market achieved a growth of 43 per cent in the fiscal year 2008, going from US$ 16.2 billion in FY 2007 to US$ 23.1 billion in FY 2008.
This formerly ‘stable’ sector, coveted by students and their parents, the IT sector is known to have taken a beating during the current economic downturn. Since it is exportfocused, the economic turmoil in the US has ensured a few months of uncertainty for the IT industry. At a press conference earlier this month, NASSCOM acknowledged that tech spending had definitely declined, and Som Mittal, President, NASSCOM was compelled to reiterate that the body would have to revise its forecast for the sector for this year (it had previously forecast a revenue growth between 21 and 24 percent to about $50 billion in the year to March 2009).
Ajoy Mukherjee, VP and Head, Global HR, Tata Consultancy Services, avers, “Current conditions are volatile, but we see significant opportunities for growth even in a tough economy. New opportunities are emerging in new growth markets and our services will play a significant role in global economic recovery. We remain cautiously optimistic about the external environment, and our hiring pattern reflects the same. We have added over 18,500 people in the first six months of the current fiscal, and are well on our way to meet our recruitment targets in the current financial year. We have also made over 24,000 campus offers in this year.”
Deepak Deshpande, former President, HR Infotech Association, an association of HR professionals in IT and ITes companies, adds, “According to a research report, there has been a sizable decline in anticipated hiring activity, although there has been no blanket ban on hiring. All said and done, the situation in India is not quite as gloomy as it is across the globe. There is still active hiring happening, and recruiter confidence is strongest in India.”
REALTY
The real estate sector is the second largest employment generator in India, after agriculture, and makes a sizable contribution to the GDP (five per cent). Moreover, it can be credited with the growth of several supporting industries like the cement or steel industries. At last count, the realty sector was enjoying an enviable growth rate of about 35 per cent, and was valued at approximately US$ 15 billion.
Today, the breakdown of the US housing market has spelled trouble for the sector in India. Sanjay Dutt, CEO (Business), Jones Lang LaSalle Meghraj, which offers leasing, consulting, research, and property and development services, asserts, “The residential real estate space has been severely affected because of the combined pressure from high interest rates and high property rates. There is also a slowdown in commercial real estate development, especially with IT, ITes and retail companies that are putting their expansion plans on hold. It is true that employers in the real estate space are letting people go, and this is happening across the board. There is now a liquidity crunch, as well as dwindling demand, making it difficult to complete projects. This is the time for realism. Investors have more or less left the market, leaving only real-end users, who do not buy for speculative purposes, only when there is a genuine need.”
RETAIL
The fifth largest retail destination globally, the Indian retail sector was ranked second after Vietnam as the most attractive, emerging market destination for investment in the retail sector, by AT Kearney’s seventh annual Global Retail Development Index (GRDI), in 2008. Moreover, according to ASSOCHAM, the Indian retail sector touched US$ 300 billion in 2007.
However, industry biggies acknowledged that the retail shimmer has dimmed somewhat,
Sanjay Jog, Chief People Officer, Future Group (Pantaloon, Big Bazaar), admits, “There is a slowdown in recruitment, but recruitment for front end operations (floor manager and below), are in full flow, as much as last year. We are not hiring in certain categories like merchandising, HR, finance, accounting and supply chain management. We had actually frozen recruitment six months ago, before recession, and were leveraging the resources we had.”
Jog clarifies that the value retail side (supermarkets) are not as affected as the lifestyle segment, although there are rationalisation of employee costs, like travelling economy instead of first, or staying at a guest house instead of a hotel. Prof Dr Uday Salunkhe, Group Director, Welingkar Institute of Management, agrees, saying, “Certain verticals within the retail sector may be impacted more so than others. Consumer electronics for instance does not appear to be as affected as the food and grocery segment.”
Nisha S*, who works with a major retail chain, reveals, “There are salary cuts in some organisations, and layoffs in support areas like IT, or in speciality formats, which companies believe are not working out as planned.”
MEDIA
The advertising industry recorded a growth of 22 per cent in 2007 to reach US$ 4.75 billion, contributing 38 per cent of the media and entertainment industry revenues. Abhinav P*, an executive with an international advertising group, presents a heartening picture for the sector, stating, “While market conditions may be adverse, companies are now looking to make more strategic investments in communication, to get people to get out and buy, since buying is, in fact, the only way out of a recession. We believe we’ll see this storm out.”
However, the US$ 5.48 billion TV industry and the US$ 3.62 billion print media segments may not be as fortunate. Dhrishti K*, a sales executive with a major, international television group, reveals, “Business is bad, revenues have dipped tremendously, and recruitment has been frozen, although layoffs haven’t begun yet. There is rumour of newer, smaller channels shutting shop. Media sales is now a tough area because the first place that companies budget is ad expenses. If they first advertised on five channels, they will now divert monies to only two in every genre, and thus, the fight for monies begins.”
No matter the situation with various sectors today, insiders believe that the Indian economy will be able to live out this phase, and when economic conditions improve, start another glorious cycle. What remains for us to do, is to strap in for the ride, and make informed choices while we wait out the storm.
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