bangalorebeats

Economic Recession, Market Down and Pink Slips

The economic recession which started from the now infamous sub prime crisis, has started to affect almost everybody over the globe. The US market is further deep in crisis with big financial giants like Lehman Borthers filing for bankruptcy, a part of AIG filing for bankruptcy etc. The US government has been compeled to pumb in dollars to bailout this ailing giants. The result – retrenchment of employees not only in the US but also all over the world. Like in case of Lehman Brothers, they had a BPO operation in India where around 2500 people used to work. All of them has been given a pink slip.

The software market is also down, as the software industry is heavily dependent on US market. With the US economy recession, the orders have become fewer. The result – the IT and software companies are clearing their bench strength. Also, to maintian profitability they are sacking unperforming employees. At this point what most companies are looking at is, high performance at optimal cost. So it again comes to the basic – Survival of the fittest. This is very evident in Indian software market now. Most companies if they have openings, are looking for only experienced candidates. I have seen some of my friends who have good knowledge and percentage, having a tough time getting into their desired job.

All this is having a chain effect. With the recession in the software market, the financial sector like banking, – specially the mutual fund, loan and allied sectors have taken a hit. Most the banks in Bangalore have closed or in the process of closing personal loans or small ticket loans. Yesterday, I read the RBI is pumping in crores of rupees to bail out the mutual fund companies.

Nothing was more evident in laying off employees in the case of Jet Airways. After a small boom time of low cost flying, the Indian aviation industry seems to be in deep crisis. We can imagine the gravity of the situation, as the unthinkable has happened. Yes, rivals like Jet Airways and Kingfisher Airlines has cut a deal to safe money and survive. It is in the news that Jet Airways is losing Rs 100 crore every day. Its retrenchment of 1900 employees was indeed a small step in cost cutting but will that help them cover Rs 100 crore. What Jet Airways need is immediate re-organization of the company, flight routes etc. They should stop flying all un-profitable routes. Employee retrenchment should be the last option. Well, today Jet Airways chief Naresh Goyal has voluntarily taken back all the sacked employees. Was it the protests by the sacked employees that worked or the threat by Raj Thackrey did the trick? I am not sure if there was any political interfarence otherwise.

The Indian aviation industry has changed a lot after the entry of Vijay Mally with his Kingfisher Airlines. His take over of Deccan and trying to give it a label of average carrier rather than a low cost carrier. Now his shaking hand with Jet Airways. I sometime feel that a big game is being played. Sahara did a good job of washing its hand from the aviation industry in the right time. Even, Indian Airlines or Indian is planning to offer 3 – 5 years vacation without pay.

The market meltdown has already had its touch on the share market, where the sensex lost the biggest loss in a day and both BSE and NIFTY come to the lowest point in last 9 months. The economic recession is moving like contegious disease from sector to another. All we can do is play that this phase will get over soon. Also, please keep plan B in place ready as backup.