The upswing of the Indian economy has experienced a slowdown lately, and this trend might continue into the next financial year. The Indian economic boom was mainly spearheaded by the IT sector which was responsible for creating thousands of jobs of every year.
The stock markets worldwide are also heading downwards and companies from all the sectors have reported a reduction in sales and profit margins. The Sensex indicates that there will be more industries that will struggle in the fourth quarter of the current financial year. However, the telecom firms will beat this trend along with manufacturing companies such as BHEL and L&T.
The rising rupee, which has appreciated by 13 per cent over the past year against the US dollar, has made exports difficult, while a recession in the US market is threatening the Indian software exporters who have their main clients in the US. The IT sector was always at a loss as the rupee gained strength in the International market. The repercussion can now be felt with TCS asking its 500 employees to resign voluntarily. IT majors pass on 45 per cent of their profit margins as salary to their employees and with a decrease in profit, the annual increment has also gone down. The yearly increment has been reduced to 7-8 per cent against the usual 15 per cent. There is going to be a fall in the recruitment of freshers as well, compared to that in 2007. In 2007, the top five IT companies hired over 50,000 employees. The companies now will make use of the ‘bench’.
This trend has landed many fresh engineers in trouble. Final year engineering students who have been recruited in IT companies are worried these days. They are extremely nervous about the possibility of their appointment letters being canceled. The proposed cut down in pay packages offered is also bothering them. The non-recruited ones will find it even tougher to get the lucrative jobs they were hoping for earlier. Analysts say that the slowdown was expected and it is just a transition period. One need not be too worried as this recession in the US may be over in a couple of years. The Indian economy has shown lots of resilience in the past and has many multifarious activities going on which provides stability against external influences. Only patience is the key to this slowdown.
[image by Delgoff]