Article : Impact of Recession on IT industry in India
Author : Dr. Kotkar S.N.
A recession is a contraction phase of the business cycle. The effect of recession is on all sectors but the main effect is on IT industry. In that mainly related to lob loss and unemployment. There are also some remedies on recession which helps to become a stable in the market. This paper presents the reasons of recession, impact of recession on IT industry in India and remedies on recession. Keywords: recession, Job loss, unemployment, IT industry.
A recession means significant decline in economic activity spread across the country lasting move than a few months, normally visible in real Gross domestic product (GDP) growth, real personal income, employment, industrial production, and whole sale-retail sales. The main effect of recession is on IT sector and is mainly related to the job loss, unemployment and others. Recession has direct impact on profitability of IT companies. It impacts the expense power of company. Companies go to a severe level of cost cutting for its survival. Usually companies try to shut down some of its unit and lay-off employees.
2. Study of Indian IT industry:
According to NASSCOM, in India, software and services industry group generated total revenue of $64 billion in 2008. It has been growing with an annual rate of 28% since 2001. The exports market constitutes the largest segment accounting for 62-66% of the total revenue generated by the Indian IT industry. IT export will account for 35% of the total export from India. As far as job creation out of this growth is concerned the sector generated 2 million direct jobs and around 7-8 million indirect jobs. Maximum top most multinational companies have been attracted in India. Some of the major companies are shifted to India. The market is gaining driven by overall economic growth increased adoption a technology and outsourcing. 3. Reasons of recessions:
One of the major causes of recession is inflection. In the word marketing system the general raise in price value of all items can cause the recession. In different ways the prices of all items are attractively increased. It leads the whole world into recession phase.
ii)Demand and supply factor with related to Software:
A recession can take place in the National cultural system secure of the excessive supply and demand of things. It is occurred when the software production is made on a massive level by software engineers. But the demands of the consumers do not come up according to the supply conditions. Hence companies have more stock and may be shut down some units or produce minimum production for some period.
iii) Insufficient work:
Due to global economic slowdown, Indian IT sector has slower growth. At that time there were no sufficient works towards software development. Due to insufficient work they become unemployed.
iv) Over utilization:
Another cause of recession is over utilization. Most of the peoples are expenditure money more than their needs and wants. Peoples have become luxurious. They want to show off. Every one is the race of fashion. Costly costumes, dresses, vehicles, mobile are being purchased and costly food is being eaten. The over utilization has been lead into absolutely recession. Economist said that peoples got to be cautious to its utilization plans in the future.
v) Falling share market:
Due to recession banks faced shortage of liquidity and they started to withdraw their investment in IT industry from India.
4. Impact of recession on IT industry:
i) Software engineers are today’s number one and tomorrows worthless: Software engineer is today’s very much demanded persons nothing number one in market but due to recession he/she was worthless. IT sector has slower growth in the recession and has no sufficient profit. Company does not achieve their profit target. Due to this some...
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