The great meltdown has begun. Americas top 3 financial companies out of business and the rest also in serious problems, share market across the globe tumbling down , in china almost 66 % and other developing countries including India up to 40% doesn’t provide a rosy picture of the financial situation.
Many asked me how it’s going to affect India in general and IT sector in particular. They were worried about the lay offs with Satyam leading the pack with 4500 layoffs. Frankly speaking even I am worried by the recent developments. But still there is some hope. The situation is not so bad.
The current crisis is man made it’s a long awaited correction happening in the consumer America. The problem is of credit crises and liquidity crunch. No major financial institution is ready to lend capital to others. The financial sector has lost the confidence. This is the reason the major national banks like Federal Reserve is pouring billions of dollars into financial sector to cool it down. (I know it didn’t strike a chord with most of you. Reading too much finance news? :D)
As far as India is concerned, she will also feel the heat but since the market is not so tightly coupled with US financial market, she can survive. For the next couple of quarters the profit margin of the major companies even IT companies will come down but then it has to go up. In this crisis everybody is talking of efficiency and improvement and the Indian outsourcing & IT companies are providing that to the world. As far as layoffs are concerned well that’s happening almost every year. Satyam might have given the pink slip to 4500 but they are recruiting around 12000. So that should cool you all.