Slowdown blues can ping for 3 years

December 24, 2008

The impact of the global economic slowdown may extend even beyond 2009 and a complete recover may take at least 3-4 years predicted Ashok Soota, Chairman and managing Director of MindTree, a leading IT Consultant comany.

Soota observes that clearly 2008 has been the year of black swan. The following quarters in 2009 can be even worse, but like in the past, this crisis will also pass away.

But during a crisis of this magnitude, the pendulum may unfortunately swing to the extremes,the MindTree Chairman added while delivering his key note address at the ICT Awards function organized by Frost and Sullivan at Bangalore recently.

2008 was a witness to global recession, weakening of the dollar, tightening of the contracts, cost cutting, jobs cuts among others he said the Indian has emerged a winner of sorts as the economy was still strong enough and the industry has been growing.

While the IT industry is expected to maintain the double digit growth in 2009 too, he he said another clear winner was the telecom industry which has kept the momentum on by adding 27.87 million subscribers during June-September this year and registering a growth of 8.6 percent on a quarter-on-quarter basis.

What should be done ?

Soota said in hard times, traditional wisdom of prudence always works. Corporates should conserve cash, assuming that the downturn will be even longer than forecasted. Enterprises should take a close look at wastage in your system, focus on utilization and overall operational efficiency.

The managers should also his people to brace up for the challenge, cut expenses and come up with innovative ideas to save more.

According to the MindTree MD, at the same time enterprises should not let go of opportunities. They should not cut expenses in areas that contribute to market expansion – such as new geographies, new services, new business models that can reduce your customers’ cost.

One must continue to invest in these areas.  In a slowdown, you should not cut out the muscle, but only the fat. Some of the areas where Indian companies might invest more are consulting front-end, complex solution architecture skills and expansion of global delivery centers, Soota stressed.

The MindTree MD further observed that the developed world is paying the price for its over-indulgence of the past. I see the current upheaval as a transformational process for the world economy.

India, on the other hand, is in a unique position. Our demographic advantage can make us emerge a new world leader. We are a young nation, full of energy. We are brought up with the mantra of first saving and then spending, which makes us financially disciplined.