ASSOCHAM takes its job cut report back

ASSOCHAM, few days ago has reported that there will be job cuts across industries post-Diwali. The cuts will be in the range of 25-30%. That was a very scary report. I almost panicked but did not blog about it as it would spread the panic. The report is at best a forecast. With the global outlook very bleak and almost all the American companies reducing workforce there are no reasons to disagree with the report. As per the report, the job cuts will be seen in 7 major sectors. Steel, cement, ITES/BPO, financial and brokerage services, construction, real estate and aviation.

We all know the aviation saga and the turmoil they are facing. Jet Airways has fired their employees and taken them back bowing to political pressure. We also heard about several mid-cap IT companies trimming the workforce. Though some could be rumors, these events will not tickle the funny bone. Most of the current workforce have started working in the post-liberalization and post-software boom world. So a lay-off or a pink slip is not heard of. For them this report might have given nightmares.

Following finance minister’s reprimand, ASSOCHAM has taken back the report saying that the report did not represent the whole industrial segment and the sample size is very small. Chidambaram has said that the job creation may slow down but that does not mean a reduction in the work force. I want to agree with Mr. Chidambaram this time. I feel that the growth is slowing down. That does not mean that we are going into a recession and people will lose their jobs. But that also doesn’t mean that every thing is rosy.

The truth is somewhere in between. 25% might be an arbitrary number picked out of thin air, but there will certainly be some reduction in the workforce. But not at the scale which ASSOCHAM has predicted. Add to this the Obama phenomenon. Obama has been very vocal about shipping of jobs from US to overseas. He is against outsourcing. I counter Obama by saying that you cannot bring jobs back to the US. You can only create jobs. Two days from now he will be the most powerful man on earth. He will no longer be a senator but the President of United States. Though good for the world, that does not augur well for the outsourcing industry. If he sticks by his word, there will be some re-alignment in the software world. Did ASSOCHAM’s report take this factor also into account?

2009 would be the toughest year for India Inc and the world at large.  India instead of relying heavily upon the west, should look east and every where else. The high paying jobs, 20% salary hikes and  easy credit days are over. Sure few industries like real estate will feel the pain but in the long run, this would be a great lesson in finance 101 to tell our kids.

Fasten your seat belts. We are experiencing some turbulence in the globalized capitalistic world and we don’t know who the pilot is.