"WHERE KNOWLEDGE IS WEALTH"

Monday, March 23, 2009

Is Recession A Financial Tsunami?

P Chidambaram, former Finance Minister of India said, "The world economy in many countries are indeed already in recession or facing recession India is no where near recession we are affected by the slowdown in global growth."
Mother of all recessions has started from USA with the collapse of businesses like Leyman Brothers and Real Estate in Germany. The economy which hitherto overheated is showing signs of cooling down causing reverberations across the world. How long will it continue is a matter of debate. Pessimists say that it may take more than two years; optimists say that it may take only a year and the realists assert that it may take 2 years to come out this threat.
Second World War brought lot of destruction to mankind. It also ruined the world economy. But it resulted into several technological innovations that brought comforts to mankind. Similarly the current meltdown will bring fruits to mankind in several ways although there will be pain for some time. But the pain is worth bearing to enjoy the fruits.

Indian Scenario:

More or less, all sectors have been hit by slowdown. Real estate and IT and ITeS sectors are badly hit. Fortunately few sectors in India have not been hit such as banking, food sector etc., The RBI has been stringent in its regulation and it has helped to overcome meltdown in the banking sector. Currently there is decline in exports in agriculture and food processing sectors which is matter of grave concern. However, good monsoon can check the slowdown.

Current Scenario:

Organizationally speaking recession is a threat for scroungers not a threat for workaholics. Rather workaholics are a threat to recession. Recession separates between men and boys. It differentiates between chaff and grain. It clearly focuses who are the real performers and non-performers. Non-performers wake up! It is time to mend their ways or else they will be fired. Recession is a wake up call for non-performers.

Companies are now looking for silly reasons to fire the people in the name of indiscipline. In fact, it is not due to indiscipline or lack of performance but because of recession. It is a retrograde step and brings down the image of the organizations.

Indian IT and ITeS sectors have been badly hit due to current meltdown. In the past, they were offering services at lower charges to American and European clients and generating revenues. The impact of American recession has played havoc in the India’s Knowledge sectors. The services sector has been hit hard. Below are few do’s during recession.

Dos during Recession:

• Always be productive.
• Show results to your boss.
• Develop new skills and abilities.
• Start networking.
• Open your communication channels.
• Think out of the box.
• Look for home based business.
• Stick to your deadlines.
• Keep cash ready.
• And last but not the least, stay committed and focused.

Merits of Recession:

Recession builds bridges among the families who until now have been separated by barriers due to work pressures. It connects people emotionally. It checks attrition. It provides breathing space to the tired people. It takes out the pressure and injects pleasure for the people.

Don’t Flight But Fight:

Recession is not new and we have faced several times in the past and survived. We would survive this time also. With the growing technology the media is highlighting recession too much thus worsening the situation further. Recession is existing but not as much as it is being overplayed.

Taming the Financial Tsunami:

Ajim Premji said global recession has offered a "huge opportunity" and would "spring-clean" those organizations which have become complacent through "excessive success" .

If required accept pay cuts, don’t risk the existing job. A bird in hand is worth two in the bush. This is the time to lie low for a while not to rise when odds are stacked against you. Cut down unwanted expenses. Spend only what is bare necessity. Take a relook at your expenses. Write down and find out the areas that could be cut to sit on cash. It is time to differentiate between needs and wants. Wants are unlimited while needs are basic requirements. Focus on needs not wants for time being.

Innovative measures to cut down expenses and enhance productivity. Unconventional and out of the box thinking approach is essential. There should be insurance coverage for recession as well.

It is time the corporate reinvent their strategies to tackle recession. They need to develop leadership potential at the senior level to prevent such crises in future. Look at the products and projects that are not paying you off and prune the same effectively. Focus on R&D and find out the new ways and means to provide innovative products and services.

Conclusion:

Recession is the result of top leadership taking the things for granted. It is time they correct their mistakes and take remedial measures to set the house in order. The US government is taking measures to check the recession through stimulus packages. The Indian government should tailor such stimulus packages to tackle the slow down.

Let us also know the fact that tough times either bring you to your knees or raise you to new heights. It all depends on your mindset and the resilience. When viewed from positive perspective it will take you to next higher orbit if you can spot and utilize the opportunities. Tough times don’t indicate an end but a bend in your life. Tough times may tumble you but ultimately humble you at the core.

The End

1 comment:

Real Estate in Toronto said...

Great article, nice to see that at least someone is being reasonable in this crisis and actually dealing with it and actually succeeding. The US and EU should look at some Asian countries for ideas how to get out of their situation.

Take care, Elli