Is Firing Manpower India Inc's Answer To Tackle Global
Recession or Are we just aping the West

post from Getting Money Wise on 13 November 2008 02:06:00 AM. © Getting Money Wise

Posted By Manrag in the wake of mass firing of employees by the Corporate India to reduce costs and imporve profit margins.But,is it really worth it to be reactive and ape the Bleeding West, instead of thinking for the Future.Decide for yourself after reading,

It?s a famous idiom? one has to think big to achieve big?. This holds true even in tough times like this. Though I may sound a bit over optimistic or u can say a bull among a dozen bears but I am sure I would find some takers for this. Till now we have been ranting about US and its consumers and their bad habits which are pulling the world economy downwards. Let?s now discuss what is happening in our own India and the way our Indian Counter parts are reacting to this situation.

First of all we all have to understand that it is US which may be under recession or is under recession and Asia is feeling the effects of it. Its not that our economies are about to go into a paralytic recession. If some body think s like this then it can be attributed to Media, Stock Exchange bleedings and of course our Analysts.

China for past 25 years has grown at Thrice the pace at which World has grown and India Since 91 has grown at rate (average) of 6.2 %..Twice the rate of world growth and has been spearheading the Asian growth. For past 4 years we have been growing at around 8%. It?s only this year that growth has been downgraded to 7.3%. But do remember it?s still sometime to go for this fiscal to end and .there can be a case where we surprise ourselves. This growth is by no means as life threatening as moods of some analysts reflect and measures taken by few corporate shows.

If you want to tell me this is all because of drying up of liquidity then I can believe it in cases of new companies or those companies which have to get their footing still. I agree that interest rates have firmed up and cost of borrowing has increased but if you say me this is reason why Biggies are annulling the projects or Soft ware Giants are shedding workforce.then I would say?? yeh baat kuch hazaam nahin huyee?. I will attribute it to some extent to traditional Indian thinking of save, save and save even if the money in your savings starts rotting or eaten up by rats. Why spend more if we can manage with less? This is very much ok if you are making a house budget. But if you are running a MNC with global clients and 1000s of employees then you need to think futuristic. This would seem to be too short sighted or myopic for a corporate strategy.

I understand that we have always lived in the era where US used to call shots. So if US co?s used to cut jobs we also had to. But times are not same now; the balance of Economic Power has started to shift. In the short term it might hurt us but we would benefit from it in long term in terms of Efficiency. We have to remember that we are INDIA and not US, its Lehman brothers which has fallen not ICICI, its Merrill Lynch which has collapsed not SBI.Every other day FM, or RBI chief comes out and convinces people that their deposits are safe, CAR of most of the banks is above required. But still we keep thinking like if don?t save this quarter we might go bankrupt next one. Cost consciousness is fine, but over obsession will hurt us only. Already world knows India for its cost and capital efficient business models, there is actually no need for us to cut so close that we amputate ourselves

?I hope it doesn?t get so bad that orders are issued to cut use of Toilet paper to improve the bottom lines?

I am strictly against training new talent as it is our industry which always keeps wheezing about shortage of quality talent, over cutting marketing as in tough times marketing and innovation can do wonders for a business. All these measures can kill Entrepreneurship, innovation and a feeling of well being which is so very essential for a business to flourish.

Our neighbor China should be seen as example during this time. I am sure they would not be cutting their project expenditures, hiring plans as we are doing. Its not about thinking g for next quarter, one has to think of future.

FMCG co?s and consumer durable co?s in particular should realize that consumer will always be there. They will have to understand their consumer better and will have to spend in building relationships rather than thinking short term, one would always need soap, shampoo, pulses, Washing machines, mobiles?but this time the consumer wants a better bargain .But remember that consumer would not be indebted for always.

If you invest in relation ships today then that same consumer would surely come next time to you, when the going gets good

Foreign competitors who have set shops in India are understanding this, then why aren?t we? They are not cutting back on expansion and growth plans.They are happy to wait for 5 years for returns.because they know that US would take some time to come to its normal self. They would have to find alternative markets. ASIA is one hell of a market for them, complex but fairly profitable and has huge scope. They see it as a harbinger of growth

This crisis should be taken as an opportunity and innovative ideas should be applied to move on path of sustainable growth. I don?t mean to say that cost cutting should not be there.Infact each organization would strive for LEAN effect.But cutting on growth plans doesn?t sound prudent even in the times when our Regulator system is sound, Banks have liquidity, RBI has cut rates to aid corporate.

Do you still think we are on the right path??

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