Indian Institute of Information Technology - Allahabad
The Speed Breaker
Post Graduate Diploma in Industrial Management (PGDIM) Batch 2008-10
National Institute of Industrial Engineering (NITIE), Mumbai.
It has not been long when the whole world was singing the saga of a never-heard-of-before astronomical growth rate. Businesses were booming. Whether it was the well-entrenched huge corporate houses or the petty local entrepreneurs, all were enjoying the party. Everyone was having his share in the cake. However, a few countries like India were getting the larger shares. India was shining....literally.
This South Asian superpower was showing the most impressive figures whether it be the economic growth rate, the consumption expenditure or the soaring stock market indices. India got all the heads turned towards it when the Sensex rose by around 100% in a year. Companies world over were finding India the most lucrative investment destination prompting them to open up businesses here that further boosted the markets and generated employment opportunities for the Indian population, a major chunk of which is of the age ranging between 20 to 35 years.
However this steep surge in the numbers was mainly due to the money that was being brought into India through global channels. Foreign companies were investing in the Indian stock markets as Foreign Institutional Investors (FIIs) that raised the sentiment in the markets in a continuum. The Indian IT industry, which largely depends on its global clients, was attracting investors all over the world and was growing exceptionally well with growth rate of more than 20% and operational margins of 25%. Being predominantly a service based industry, it created jobs like snails in a pond. Almost every engineering graduate was getting a job in some or the other IT firm.
The opening up of private companies offering fancy salaries in the metropolitan cities added new dimensions to the urban life in India. The youthful, adventurous and fun-loving souls in India whole-heartedly responded to this new transformation they were witnessing in cities like Bangalore, Noida and Mumbai. Young graduates coming from small cities and towns to work in corporate houses were naturally fascinated by the grandiose life in the metros. They were ready to spend money lavishly on anything that symbolised modernization, entertainment, style, status or western culture. They felt as if they have discovered their true selves in this new world. Business houses looked at this as a major opportunity. Pubs, discotheques and fast food joints were established all across these cities and as predicted the youth embraced them gleefully. It became a routine affair for young software engineers to regularly have a blast at a disco or to hang over at joints with flashy ambience. They became prodigal enough to laugh out on advices about saving more for emergency purposes. Their stance was to live life completely today itself and not to bother much about the future at this young age. They knew their future was secure. After all, India was shining.
When the waves of economic slowdown originated in the west, it was not long when the turbulence was felt here. The US recession torpedoed the very foundation of the Indian growth story. Legendary companies in the US were collapsing and filing for bankruptcy. The shock wave brought about a huge slump in markets worldwide. The Sensex that breached the 21000 mark in January ’08 declined to a 9000 mark in January ’09. This led to havoc in the Indian job market. Leave aside the petty IT professionals, even executives working in big investment banks lost their jobs. Indian youth that was riding on a 9% growth suddenly felt the impact of the speed breaker. Finally, the flashes were going out.
It is often said that life balances itself. There would be equal opportunities and threats in the path of life. Any unusual highs would soon be followed by unexpected lows. That is exactly what has happened. An upsurge was nullified by an equally powerful downturn.
The downturn has proved to be a great lesson for youngsters in India. Money is a hard-earned gift. It is the fruit of one’s labour and efforts. It is the source of one’s livelihood, the crutches for the cripple. The value money holds in the life of every person makes it the most respectable thing in the world. Money needs to be respected. It needs to be valued. Its significance and importance need to be apprehended. And now the youth is learning that, though a really hard way.
The massive layoffs across various sectors have infused fear and insecurity in the hearts of many working professionals. No one knows if he could be the next one to be handed over the pink slip. In such crisis, everyone is trying to work hard in his organisation and prove his worth. The attrition rates in several IT firms have gone down fairly. People with even very little doubts about the future of their jobs and their companies are also now trying to save more money and cutting unnecessary expenditure.
Several surveys conducted across India have shown that young professionals are now judiciously monitoring their spending and are trying to minimise their expenditure. The purchases of luxurious items have decreased and people are also trying to avoid outings that would cost a lot. They are now starting to listen to their elders who keep warning them about their lavish behaviour. Advices on savings are now being heeded to.
This slowdown is going to die out eventually and things would be back to normal. The proceedings may not be smooth like a Los Angeles freeway as they were before but still India would fight back. But the point is that the lessons learnt from this slowdown need to be remembered forever. Money should not lose its respect again.