Tackling recession in IT

Although talks of a double dip recession and all time high unemployments are still doing the rounds in US, Indian IT firms seem to be all gung ho about the coming financial year. The expectations from the coming year the IT heads are talking about is not just rhetoric can be gauged by the hiring sprees, announcements of wage hikes, promises of better bonuses and one or more promotion cycles for the year. What happened last year could not be strictly called a recession for IT companies. While many core industries, especially Banking and Finance Services, suffered; with many closing down shops as well, the IT budgets never got slashed as much as one would have expected. New projects and investments in nascent technologies were kept in abeyance, but the savings being accrued from outsourcing and offshoring meant that the bread and butter of Indian IT industry was never in danger. In fact had it not been the fallout of jobs moving abroad and the new Governments policy of trying to keep jobs on shore, IT companies here might have even been able to reach their expected growth targets.

On the other hand while the rest of the world was grappling with recession, Indian IT found it the right time to consolidate their operations. Unbridled growth of the last decade meant that there was a lot of scope for cost savings and increasing efficiency. This was carried out in most companies by slowing down or stopping hiring, cutting down salaries for existing employees in some cases but mostly for fresh joinees from college. In addition the internal cost savings from cutting down on travel and stay, cutting down on operational expenses, consolidation of delivery centers, freezing the capex plans, and most of all by deferring hikes, bonuses, promotions and even annual gifts led to huge savings for these companies which would be carried down for a few more years.