Recession and India - Impact on Indian IT Industry

Abstract

In economics sense, recession is a general slowdown in economic activity over a long period of time, or a business cycle contraction. During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment, spending, capacity utilization, household incomes, business profits and inflation fall during recessions, bankruptcies and the unemployment rates rises. Recession in the West, specially the United States and Europe has significantly affected Indian IT companies which depends upon the outsource projects from these countries. The IT projects are a part of planned expenses for future growth of business. In this period, many US/UK based companies had cut-down on their IT expenses. This had a significant impact on Indian IT industry. IT companies has taken various steps to control their outgoing. With this study, we will try to find out how the cost component been managed by Indian IT companies and what are the impacts of such a strategy on their business. In IT Industry, cost of employee’s package makes a major part of expenses. Many companies come with the concept of virtual bench, fired highly paid employees, put trainees on project by replacing experienced. The research for this subject is done as an exploratory research project. An Exploratory research provides good insights into the issue, situation or any business ideas. To define the research problem, an exploratory research can be carried out. The problems are formulated clearly in exploratory research and it aims at clarifying the concepts, gathering explanations and gaining insights.