Dealing with the Recession – what you could do, other than worry
Loading ...The sentiment, as the say in stock market parlance, is negative, with the IT BPO industry bracing for a business slowdown. So, the question on the wall for small and mid market players is: What should one do? Answers are varied, but one truth holds clear – ‘You better have a plan, and fast’.
The sentiment, as the say in stock market parlance, is negative. Notwithstanding that some of the IT- BPO sector’s largest companies have’nt done too badly in Q3, the industry as a whole is bracing for a business slowdown. The buzz on the street is that the market situation will only get worse with US-based recession hit clients slowing decisions and spending. So, the question on the wall for small and mid market players is: What should one do? Answers are varied, but one truth holds clear – ‘You better have a plan, and fast’.
What’s the slowdown all about?
It’s more than the negative macro economic indicators we read in the newspapers each day. At one level, it is, as a speaker from Bain Consulting at a NASSCOM Friday 2.0 sessions put it, “a crisis of trust.” Basically, bankers, reeling from the collapse of hoary industry institutions such as AIG, are just refusing to lend, thereby creating a liquidity crunch in the market. At the other end, it is clients who no longer want to renew contracts or want to push prices downward. It is about companies who cannot follow through on job offers made on campus because work is in short supply. In either case a business has deteriorating access to funds for sustenance and growth.
An oft repeated argument here is that the Indian market is relatively insulated and will sustain itself during the slowdown. While that’s partly true for banks and institutions in the regulated and some-what insulated financial sector, the same is not true of export dependent industries. Especially when the domestic market in India for IT- BPO is far from large. Various discussion threads in the Emerge community have talked about this and the need for the development of the domestic market – for a related discussion read ‘How will you transform towards transforming IT in India?’ . The bottom line is that today, the domestic market cannot absorb the impact of the slowdown.
Plan, plan, plan
The Bain presentation at the 43rd Friday 2.0 session offered up specific suggestions on what companies could do. A key idea centered around planning and the importance of it during a business recession. The presentation went on to discuss the example of some companies and their legendary planning process. Some pointers for all companies to adopt:
- Creating a quarterly plan that drills down into specific business scenarios
- A mitigation plan for the time when business assumptions slump, that drills down into specific action for cost and revenue
- A weekly, monthly and quarterly audit that tracks this plan and triggers execution of the mitigation plan
- This way, when the hard times hit, a business can swing smoothly into a pre-agreed plan without the delays of debates and discussion when the axe is swinging at you. This approach may be particularly relevant for large, multi division, geographically spread companies.
Converting crisis into opportunity
For SMB players, agility could be the best defence. This specifically holds good for under exploited markets in Central Europe, West Asia and Africa, which are the first to go off budget radars for large global players. Particularly for the software products industry, as travel budgets shrink and teams reduce, large players from the US or Europe may not be as active in exploring these markets. This is a good time for SMBs to build mindshare.
Quiet Time for Growth
One line of argument is that the recession offers ‘quiet time’ for companies to re-assess offerings and perhaps work on building new products/ solutions. As Suresh Sambandam, CEO, Orangescape puts it in a discussion thread on the community, “this is the time to create new products. It is a good time to get resources at reasonable costs. And it is anyway going to take a year or so to develop, test and get beta customers, probably more like two years. By the time one does that, it is most likely the market issues are behind our back and people are ready to buy.”
Fortify the ranks
For large, long established players this is the not first slowdown that they’ve found themselves in the midst of. So, when asking around on what worked the last time, one idea really stood out: “Train your managers to focus on what they can change rather than what they cannot.” Simple enough really, but very effective, given that most people don’t instinctively look to what can change instead of hyperventilating about the state of the economy and the cut back from their customers. Such a focus across the managerial ranks can fill people with a sense of purpose to replace defeatism.
These are but a few ideas, part inspired by the discussions on the Community. Other discussion threads to read for more ideas on what to do in a slow market:
These are but a few ideas, part inspired by the discussions on the Community. Other discussion threads to read for more ideas on what to do in a slow market:
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
Read another review of the Friday2.0 session by Bain Consulting at Prayag BlogSpot :-
Trackback :
http://blogs.prayag.com/wp-trackback.php?p=131
Thanks Suresh. The other part of the challenge (on utilizing quiet time) is actually funding that product build-out when there seem to be so many other priorities for cash. It would be interesting to get your perspective on this.
Very good post for the time. Also thanks for cross referencing.