The economic meltdown is here, the nightmare has just started, tons of companies are shutting down left right & center, thousands are being laid off and many many more expected. The year 2009 does not look good for anyone & "global recession" is the latest buzz word. All of us have to 'hunker' down and try to survive.
But let us take a re look at a couple of issues that are taking place and that are defining the term 'economic melt down'
- The Banks are not lending money, there is a cash crunch
This means that companies will have to use their own money to run their routine business and not use credit for that. Well isn't this way a business is supposed to be run ? You get loans & credit for upcoming projects, you don't usually use loans to run a supposedly sustainable business do you ? Is this recession or correction ?
- The Banks / Investors will be tight fisted and it will require proper project projections and serious due diligence for money to be invested.
Strange, so what was the criteria thus so far ?...wasn't proper project projections & serious due diligence basic criteria to get funding anyway ? Is this recession or correction ?
- Salary raise will probably be a mere 5-10% as compared to 30-40% in 2008 ?
7-10% is a well tried and tested norm for business for so many years. Everyone in the industry knew long ago that 30-40% increase yearly for salary for never be sustainable... so why the outcry now ?
- There will be continuous lay offs
It was common knowledge that most large IT companies in India are over staffed. They have so many workers on bench all the time and projects have been overestimated just so that more engineers could be billed for. The clients were paying so no one was asking. Now the clients are cutting project sizes to realistic levels and hence realistic levels of man - power. The rest will get laid off. Once why the noise ? It was all well known.. and it just catching up.
- Salaries will be restructured
Now I am surprised this is even being attributed to the recession. Anyone who has anything to do with the IT field knew the salaries were sky high and many a time just ridiculous. Even if a person did not have the experience, nor the skill and really did not deserve it , they still got mammoth salaries just to retain them... do you really think this would be sustainable over the long run ??. Salaries are going to come down to what they were supposed to be !
So would this be termed as recession or a correction. ?
I think we are just coming back to reality, we are being forced to accept one of the very basics of money... "Cut your coat according to your cloth ". Companies will now downsize to what they realistically are, their valuations will be more realistic, they wont have bloated reserves and yet use money from the bank, team sizes and project estimates will be what they are really supposed to be, salaries will be based on expertise and experience and finally we will back to "living, working & conducting business within our means."
