Impact Of Global Recession On India

Impact of global recession on India America is the most effected country due to global recession, which comes as a bad news for India. India have most outsourcing deals from the US. Even our exports to US have increased over the years. Exports for January declined by 22 per cent. RECESSIONS ARE the result of reduction in the demand of products in the global market. Recession can also be associated with falling prices known as deflation due to lack of demand of products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growth in the west. Recession in the West, specially the United States, is a very bad news for our country. Our companies in India have most outsourcing deals from the US. Even our exports to US have increased over the years. Exports for January have declined by 22 per cent. There is a decline in the employment market due to the recession in the West. There has been a significant drop in the new hiring which is a cause of great concern for us. Some companies have laid off their employees and there have been cut in promotions, compensation and perks of the employees. Companies in the private sector and government sector are hesitant to take up new projects. And they are working on existing projects only. Projections indicate that up to one crore persons could lose their jobs in the correct fiscal ending March. The one crore figure has been compiled by Federation of Indian Export Organisations (FIEO), which says that it has carried out an intensive survey. The textile, garment and handicraft industry are worse effected. Together, they are going to lose four million jobs by April 2009, according to the FIEO survey. There has also been a decline in the tourist inflow lately. The real estate has also a problem of tight liquidity situations, where the developers are finding it hard to raise finances. IT industries, financial sectors, real estate owners, car industry, investment banking and other industries as well are confronting heavy loss due to the fall down of global economy. Federation of Indian chambers of Commerce and Industry (FICCI) found that faced with the global recession, inventories industries like garment, gems, textiles, chemicals and jewellery had cut production by 10 per cent to 50 per cent. How to tackle the global slump? “Our economy is shrinking, unemployment rolls are growing, businesses and families can’t get credit and small businesses can’t secure the loans they need to create jobs and get their products to market,” Obama said. “With the stakes this high, we cannot afford to get trapped in the same old partisan gridlock. ” The following measures can be adopted to tackle the recession: •

Tax cuts are generally the first step any government takes during slump.

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Government should hike its spending to create more jobs and boost the manufacturing sectors in the country.

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Government should try to increase the export against the initial export.

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The way out for builders is to reduce the unrealistic prices of property to bring back the buyers into the market. And thus raise finances for the incomplete projects that they are developing.

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The falling rupees against the dollar will bring a boost in the export industry. Though the buyers in the west might become scarce.

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The oil prices decline will also have a positive impact on the importers.

Wipro confident about withstanding recession • •

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Reuters LONDON: Indian IT outsourcing company Wipro is seeing a few customers cancel contracts and more delaying or downsizing deals as a result of deteriorating global economic conditions, its joint chief executive said. Girish Paranjpe added that Wipro, India's third-biggest software services exporter, was feeling minimal impact from last week's attacks that killed almost 200 people in Mumbai, and reiterated that the company expects business to improve next year. Referring to the Mumbai attacks, he told Reuters in an interview on Monday, "I don't see any operational impact of that ..." When asked about cancellations by Wipro's customers -- who include Cicso, Credit Suisse and Nortel -- he said: "Some few, but much more delay, postponement, resizing -- a few cancellations." Paranjpe said he remained hopeful that business would pick up in the company's first quarter beginning in April next year after a slowing that began about a quarter ago. Customers cannot sustain constrained spending indefinitely, he said. "About six months you can manage with compression, three to six months you can manage with compression. Beyond that, you have to start thinking longer-term," he said. "I'm still kind of optimistic that we would have gone past the bottom some time in the first fiscal quarter" next year, he added. Sector leader Tata Consultancy Services and fellow large Indian outsourcer Infosys have recently expressed cautious optimism about the market, but like most peers they face at least short-term uncertainty. Wipro makes about half its revenue in the Americas, and about a quarter globally from the financial services sector -- a fairly typical business split among Indian outsourcers, whose large English-speaking workforces gave them an early advantage. Asked how tough price negotiations were becoming, Paranjpe said Wipro was trying to help customers cut costs in other ways than lowering prices. "There is a discussion about how we can alleviate the pain that they are going through. Our discussion has been about how we can help them with cost, rather than focused on price." "That's what clients ultimately care about: Given the downturn, how much has my budget gone down and to what extent can you contribute to help me bridge the gap?" he said. Paranjpe argued that big players like Wipro stood to gain market share as customers looked for reliable partners. "You want fewer people you can bet on, who are going to survive the downturn as well. So there is an almost automatic flight to size and quality," he said. Although consolidation in the financial sector would undoubtedly make for a tougher market, Paranjpe said it would also bring opportunities in the medium term as customers would have to integrate and streamline their operations. It would also bring chances to make acquisitions as valuations dropped -- possibly large ones, after last year's $600 million buy of Infocrossing -- and to make selective hires of personnel who might have been unaffordable in better times.

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"I think we have gone past the small-budget acquisitions, which is not to say that we will never do a small one, but which is also to say that big dollar signs don't scare us," he said. "We would like all the acquisitions to be made outside India so we can globalise our workforce." Asked about the effect of the weakening rupee and stronger dollar on Wipro's results, Paranjpe said, "It's dizzying, actually. It's completely roller-coaster, on the currency side." "So what we have decided is that we will simply go hedge, for a certain duration, and let our treasury worry about that, and the business will really focus on generating profits from operations," he said. Wipro will be more cautious about spending but does not plan a hiring or travel freeze, Paranjpe said. "Building our new facilities we're kind of watching more carefully, hiring lots more people. We're kind of being circumspect about spending on marketing ... being more cautious about travel." "Full-page ads are out," he added. "Any business which has been in full growth mode for five years does accumulate a certain amount of excess baggage."

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Wipro results fail to match expectations BANGALORE, India — Wipro, the No. 3 Indian software services exporter, fell short of expectations with an 11 percent rise in quarterly profit Friday, but said it would be able to mitigate the effect of higher wages. The New York-listed Wipro, which counts telecoms gear makers Cisco and Nortel among key clients, also said improved results helped offset the effect of a firmer Indian rupee. "During the quarter, improved realizations and rationalization helped us fully mitigate the pressure on profitability on account of foreign exchange impact," Wipro's chief financial officer, Suresh Senapaty, said. "We have seen an increase in the number of $50 million clients and now have our first $100 million client." Wipro said net profit rose to 8.26 billion rupees, $210 million, in its fiscal third quarter ended Dec. 31 under U.S. accounting standards, up from 7.45 billion a year earlier. Revenue grew 32 percent to 52.36 billion rupees from 39.64 billion, helped by large outsourcing deals, including five multi-year, multi-million dollar deals. A Reuters poll had forecast a net profit of 8.65 billion rupees on revenue of 52.78 billion for Wipro, which provides information technology solutions and services like system integration, software application development and maintenance and research services. Wipro said it added 39 clients during the quarter and expected revenue from its global services business in the March quarter to be about $955 million.

Comparatively lower wages and competent English-speaking workers have helped Indian services firms grab outsourcing deals from overseas firms, but a strong rupee, soaring salaries and prospects of a U.S. recession are worries. Wipro and bigger rivals Tata Consultancy Services and Infosys Technologies, which had both beaten expectations and forecast strong growth, are rapidly expanding into Europe, Asia Pacific and Latin America. This will help reduce their dependence on the U.S. market that now provides more than half their revenue. A strong rupee, which rose 12 percent against the U.S. dollar in 2007, poses a risk to Indian software services firms that get over three-quarters of their revenue from overseas. Sector leader Tata Consultancy beat forecasts Wednesday with a 20.5 percent rise in quarterly profit and Infosys last week posted a 25 percent rise and raised its full-year guidance. Wipro, a diversified firm with interests in computer hardware and consumer goods, also competes with foreign companies like IBM and Accenture in the outsourcing market. Shares in Wipro rose 14.3 percent in the December quarter, outperforming a 2.1 percent fall in the software services sector index, but lagging a 17 percent rise in the main Mumbai index.