RESEARCH REPORT ON “UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY” SUBMITTED TO KANPUR INSTITUTE OF MANAGEMENT STUDIES (AFFILIATED TO GAUTAM BUDDHA TECHNICAL UNIVERSITY, LUCKNOW) IN PARTIAL FULLFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION UNDER THE GUIDANCE OF ( ) SUBMITTED BY: 1
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RESEARCH REPORT
ON
“UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY”
SUBMITTED TOKANPUR INSTITUTE OF MANAGEMENT STUDIES(AFFILIATED TO GAUTAM BUDDHA TECHNICAL
UNIVERSITY, LUCKNOW)
IN PARTIAL FULLFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
UNDER THE GUIDANCE OF ( )
SUBMITTED BY:( )
ROLL NUMBER - MBA BATCH – ( )
ON (date )
1
CERTIFICATE (FROM PROJECT GUIDE)
This is to certify that Roll number a student of MBA in Kanpur Institute of Management
Studies, has carried out the Summer Training/mentoring Project work presented in this report
titled “UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT
INDUSTRY” for the award of Master of Business Administration from Gautam Buddha
Technical University/ Kanpur Institute of Management Studies for the academic batch 2010-
12, under my guidance.
Name of the Project Guide
(Ms. Ankita Bhandrai)
Kanpur Institute of Management Studies, Unnao
HOD (Head of Department)
(Dr. Ankur Johari)
Kanpur Institute of Management Studies, Unnao
2
DECLARATION(FROM STUDENT)
I, ( ), hereby declare that the project work entitled “UNDERSTANDING RECESSION:
CHANGE IN HRM TRENDS IN IT INDUSTRY” submitted towards MBA Certificate is
my original work and the dissertation has not formed the basis for award of any degree,
associate ship, fellowship or any similar title to the best of my knowledge.
Place: ( )
Date: Roll No.:
MBA BATCH – ( )
Kanpur Institute of Management Studies, Unnao
3
ACKNOWLEDGEMENT
In preparing this report, I have been fortunate enough to have the support, assistance and encouragement of quite a few people.
I would like to take this opportunity to express my deep sense of gratitude and profound indebtedness to Dr. P.N. Bajpai Hon. Director, KIMS, Kanpur who gave me an opportunity to do such a challenging job.
I would also like to thank and acknowledge Dr. Ankur Johari HOD (MBA) at KIMS, Kanpur and Ms. Ankita Bhandari (My Project Guide) for his unflinching faith and wholehearted support extended to me.
I would also like to thank all my friends and classmates for their help and support during completion of this project.
I would like to express my special thanks to my friend Mr. Amritesh Sharma for his tremendous support and encouragement which made completion of this report possible.
Whatever the shortcomings of this report, they are mine; whatever its strengths; it owes much to the generous contributions of all the above-mentioned people.
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LIST OF CONTENT
S.No. Chapter Page No.
1. Executive Summary of the project 9
2. Reason for selection of this Research report 11
3. Objective of the Project 12
4. Suggestion for readers 13
5. Scope of the Project 14
6. Introduction 15
7. Information about I.T industry in India 16
8. Role of IT in Indian Economy 19
9. Impact of recession on Indian Economy 21
10. Impact of recession on world economy 24
11. Causes of recession 28
12. Advantage of I.T 32
13. Business process outsourcing IT 33
14. Top 15 IT Companies in India 34
15. Effect of recession on HRM 37
16. IT and Challenging role of HRM 45
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17. Research methodology 59
18. Data analysis 61
19. Findings 67
20. Limitations 68
21. Conclusion 71
22. Questionnaire 72
23. Bibliography 74
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TABLE OF FIGURES
S.No. Table Page No.
1. MZM Chart 25
2. Housing Table 26
3. BPO 20
4. Salary Component 51
5. Reimbursement Component 52
6. Other Benefit Component 52
7. Retail Component 53
8. Satisfaction level of employee 73
9. Accommodation table 53
10. Data Analysis Chart 62
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TABLE OF ABBREVIATIONS AND ACRONYMS
S.No. Abbreviation or Acronyms Page No.
1. Money-zero-Maturity(MZM) 25
2. BPO(Business Process Outsourcing) 20
3. Information technology(IT) 09
4. KPO(knowledge Process Outsourcing) 20
5. UK(United kingdom) 19
6. US(United States) 63
7. CEO(Chief Executive Officer ) 21
8. TCS(Tata Consultancy Services) 37
9. IBM(Intercessional Business Machine) 38
10. IVR(Interactive Voice response) 48
11. HRM(Human Resource Management) 47
12. NCR(National Capital reason) 53
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EXECUTIVE SUMMARY
OBJECTIVES:-
To study HRM Trends in IT sector.
To study the effect of recession in IT.
To study the effect of recession on employee wages and salary.
To study the salary and wages structure in IT.
To study the employees vision about the recession
METHODOLOGY:-
The methodology which I used for finding the data is personal and structured
interview. First I structured questionnaire which is a formal list of questions framed
so as to get the facts. I felt the employee should be taken into confidence and clearly
told why the survey is being undertaken so that he/she would realize its relevance and
give the desired information accurately
SAMPLE:-
It is very important part of research methodology. In this a point of population or a
point of population or a subject form a set of units, which is provided by some
processes or other, usually by deliberate selection with the object of investigating the
properties of the parent population or set. The sample designs which I used are
random sampling. A random sample gives every unit of the population a known and
non-zero probability of being selected.
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FINDINGS
Gone are the days when IT sector used to take contract and provide service
Due to the recession, IT sector are compel to adopt risk sharing & gain sharing
contract model
The outcome of such Model are more risky
Now companies are not spending money on variable-pay of their employees
Employees are forced by companies to spend more time on job as comparison to
previous
Some companies are firing out their employees, now companies are emphasizing
on offshore location rather than to onsite
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REASON BEHIND SELECTION OF THIS AREA OF RESEARCH
The project UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT
INDUSTRY is a study which shows the changes in Human Resource trends in IT industries
which has been very influencing after the recession period in last few years and now in these
types of IT industries and had changed the traditional approaches to HR and other
administrative functionalities.
As IT industries are the most important factors of country’s economy and contribute a great
value to it. The Human resource in these types of industries is of specialized type and needs a
different kind of approach for management.
So, it makes a solid reason to understand the causes and the effects of recession which drove
the HR trends to a new level and had made a new benchmark for these processes and this is
the reason which forced me to study this field and find some solutions to overcome these
problems.
11
OBJECTIVE
The objective of this project is very clear as the name UNDERSTANDING RECESSION:
CHANGE IN HRM TRENDS IN IT INDUSTRY suggest that this project is a study for
understanding the recession during last years which has made several people to lose their
jobs and several companies to closer and so many countries to down to their economy.
For the above reasons this topic needs a deep study and understanding so as we can save
ourselves form these types of problems in future and hence this study and report.
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SUGGESTION FOR READERS
In the study of this research all the possible data and information has been collected form all
the possible sources but none is perfect in this world and the second reason this study and
report is done by a single person at her maximum extent collecting all possible data in such a
sort time so it will not be considered as a shortcoming if some discrepancy is found and some
typing or other formatting errors are there.
So, it is suggested that, please do understand and make further study to relevant points if so
happen as I had tried my level best in making this project and I am also ready to make any
correction if suggested and required.
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SCOPE OF THE PROJECT
Scope of this project is very vide as this is the project which gives an understanding about
recession like situation which causes disasters effects on individuals, bodies and government
as well.
So it is required some kind of study which can find the reasons behind these problems and
we can save ourselves if future by not making the same mistakes.
That’s why we can say the scope of this project lies form individual person to an organization
to a government and all others whoever wants to understand this problem.
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INTRODUCTION
INTRODUCTION TO IT INDUSTRY
India's economy grew at its slowest pace in 2007 in the third quarter as the Asian giant
began to feel the full brunt of the deepening global downturn, official data showed Friday.
The worse-than-expected 5.3 percent expansion in the three months to December, down from
8.9 percent a year earlier, spurred expectations the central bank will cut interest rates further
to boost the flagging economy.
The numbers were grim reading for the Congress-led government, which faces elections by
May, and has been eager to spur the economy ahead of the polls.
India's government has long said it needs double-digit growth if it is to drag hundreds of
millions of its people out of grinding poverty.
Growth in Asia's third-largest economy was sharply lower than the 7.6 percent expansion
recorded in the second quarter and came in below analysts' forecasts of 6.1 percent.
Agricultural production, which accounts for nearly 20 percent of gross domestic product and
provides a living for two-thirds of Indians, contracted by 2.2 percent compared with 6.9
percent growth in the year-ago period.
Manufacturing activity shrank by 0.2 percent, down from growth of 8.6 percent a year earlier
amid flagging domestic and export demand.
The government has predicted the economy, which grew by nine percent last year, will
expand 7.1 percent this financial year to March, but economists said the latest data meant it
would miss the target. Most economists expected full-year growth of 6.5 percent to 6.7
percent.
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The government said the winter wheat crop would be better than normal and various stimulus
measures it has announced would help boost growth. But to meet the government's growth
target, expansion would "have to accelerate substantially to 7.7 percent in the fourth quarter,"
noted Chandrajit Banerjee, director general of the Confederation of Indian Industry, calling
for more rate cuts to stimulate the economy. With inflation at a 14-month low of 3.56 percent, the
bank has ample room to cut rates, economists said.
Earlier this week, the government cut excise duties to eight percent from 10 percent and
lowered the service tax to 10 percent from 12 percent. It also prolonged a cut in value-added
tax announced last December.
"The full impact of the recession in other parts of the world, especially Europe and Asia, is
yet to unfold" and the economy "may feel a further impact in coming months," acting finance
minister Pranab Mukherjee said Tuesday.
While the government hopes for seven percent growth in the next fiscal year, economists
forecast 5.5 percent. The central bank has calculated the effect of the stimulus from higher
government spending, tax cuts and interest rate reductions already amounts to around 80
billion dollars. But with India's fiscal deficit ballooning, the government cannot introduce
any "big bang" stimulus packages like neighboring China, economists say, and must rely
heavily on interest rate cuts to jumpstart the economy.
The Indian slowdown will impact the smaller IT-ITES firms more," Hari Rajagopalachari,
executive director at PricewaterhouseCoopers India, told ZDNet Asia in an e-mail interview.
In fact, he added, it may lead to increased consolidation in the small and midsize industry
segment.
According to Milan Sheth, Ernst & Young India's partner of business advisory services and
leader of technology and telecom verticals, the economic slowdown will most affect midsize
IT-ITES companies.
"Most small firms have very strong niches. It's the midsize firms that will be badly hit in the
event of a portfolio rationalization by the American clients," Sheth told ZDNetAsia in a
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phone interview. The economic slowdown in the United States has already had some impact
on the Indian market. The rupee has been strengthening against the dollar for over a year
now, causing worries for Indian exporters.
The Indian stock markets also crashed due to the downturn, with the BSE Sensex dipping by
nearly 13 per cent in just two trading sessions in January this year. It bounced back after the
U.S. Federal Reserve cut interest rates. The BSE Sensex, or Bombay Stock Exchange
Sensitive Index, comprises 30 of BSE's largest and most actively traded stocks.
Manufacturers in some of the major sectors like textiles, metal and metal products,
machinery and equipment, leather and chemicals have reportedly planned cuts in their
productions ranging from 10-50 per cent between November 2007 and March 2009 due to
fall in the demand in the wake of the global economic crisis. As a result, the growth of the
manufacturing sector could further slow down in the coming months.
The survey also revealed that downsizing of employment in the range of 10-30 per cent is
expected in leather and leather products sector, followed by metal and metal products,
textiles and jewellery in next few months. Falling demand in the EU, the US, Japan and other
developed countries and a steep increase in raw material prices in last few months along with
liquidity crunch have, in some way, hindered the growth of the leather sector. Likewise, the
primary reason for the slowdown in the metal sector is falling demand for heavy vehicles,
which has reduced the demand for metals.
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INFORMATION ABOUT IT INDUSTRY IN INDIA
Just as the Gulf has its natural resources in crude oil and South Africa in diamonds, India's
natural resource lie in its abundant technically skilled manpower. India is the world's second
largest exporter of software (after the U.S.), and is the source of management and technical
talent for over 40 per cent of new start-ups in Silicon Valley. Thanks to its large English-
speaking scientific and higher education institutions, specialist computer institutes, and low
costs of software talent, India has more software companies with ISO 9000 certification than
any other country in the world.
There is more than enough evidence of the superlative role that Indians play in the progress
of the Net. The impact of India's success abroad is also being felt. The stars of the Indian
Internet industry are the Web solutions and Web-ware companies, many of whom have made
the transition from offshore turnkey and services companies to full-fledged e-commerce
service providers and Web strategy consultants. IT heavyweights like Microsoft, Intel, Cisco
and Compaq always feature India prominently in their itineraries.
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ROLE OF IT INDUSTRY IN INDIAN ECONOMY
The contribution of India's IT industry to economic progress has been quite significant. The rapidly expanding socio-economic infrastructure has proved to be of great use in supporting the growth of Indian information technology industry. The flourishing Indian economy has helped the IT sector to maintain its competitiveness in the global market. The IT and IT enabled services industry in India has recorded a growth rate of 22.4% in the last fiscal year. The total revenue from this sector was valued at 2.46 trillion Indian rupees in the fiscal year 2007. Out of this figure, the domestic IT market in India accounted for 900 billion rupees. So, the IT sector in India has played a major role in drawing foreign funds into the domestic market.
The growth and prosperity of India's IT industry depends on some crucial factors. These factors are as follows:
India is home to a large number of IT professionals, who have the necessary skill an expertise to meet the demands and expectations of the global IT industry.
The cost of skilled Indian workforce is reasonably low compared to the developed nations. This makes the Indian IT services highly cost efficient and this is also the reason as to why the IT enabled services like business process outsourcing and knowledge process outsourcing have expanded significantly in the Indian job market.
India has a huge pool of English-speaking IT professionals. This is why the English-speaking countries like the US and the UK depend on the Indian IT industry for outsourcing their business processes.
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The emergence of Indian information technology sector has brought about sea changes in the Indian job market. The IT sector of India offers a host of opportunities of employment. With IT biggies like Infosys, Cognizant, Wipro, Tata Consultancy Services, Accenture and several other IT firms operating in some of the major Indian cities, there is no dearth of job opportunities for the Indian software professionals. The IT enabled sector of India absorbs a large number of graduates from general stream in the BPO and KPO firms. All these have solved the unemployment problem of India to a great extent. The average purchasing power of the common people of India has improved substantially. The consumption spending has recorded an all-time high. The aggregate demand has increased as a result. All these have improved the gross production of goods and services in the Indian economy. So in conclusion it can be said that the growth of India's IT industry has been instrumental in facilitating the economic progress of India.
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IMPACT OF RECESSION ON INDIA
Indian companies have major outsourcing deals from the US. India's exports to the US have
also grown substantially over the years. The India economy is likely to lose between 1 to 2
percentage points in GDP growth in the next fiscal year. Indian companies with big tickets
deals in the US would see their profit margins shrinking.
The worries for exporters will grow as rupee strengthens further against the dollar. But
experts note that the long-term prospects for India are stable. A weak dollar could bring more
foreign money to Indian markets. Oil may get cheaper brining down inflation. A recession
could bring down oil prices to $70.
The whole of Asia would be hit by a recession as it depends on the US economy. Even
though domestic demand and diversification of trade in the Asian region will partly counter
any drop in the US demand, one simply can't escape a downturn in the world's largest
economy. The US economy accounts for 30 per cent of the world's GDP.
Says Sudip Bandyopadhyay, director and CEO, Reliance Money: "In the globalize world,
complete decoupling is impossible. But India may remain relatively less affected by adverse
global events." In fact, many small and medium companies have already started developing
trade ties with China and European countries to ward off big losses.
Manish Sonthalia, head, equity, Motilal Oswal Securities, says if the US economy contracts
much more than anticipated, the whole world's GDP growth-which is estimated at 3.7 per
cent by the IMF-will contract, and India would be no exception.
The only silver lining is that the recession will happen slowly, probably in six months or so.
As of now, IT and IT-enabled services, textiles, jewellery, handicrafts and leather segments
will suffer losses because of their trade link. Certain sections of commodities could face
sharp impact due to the volatile nature of these sectors. C.J. George, managing director,
Geojit Financial Services, says profits of lots of re-export firms may be affected. Countries
like China import commodities from India do some value-addition and then export them to
the US.
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The IT sector will be the worst hit as 75 per cent of its revenues come from the US. Low
demand for services may force most Indian Fortune 500 companies to slash their IT budgets.
Zinnov Consulting, a research and offshore advisory, says that besides companies from ITeS
and BPO, automotive components will be affected.
During a full recession, US companies in health care, financial services and all consumer
demand driven firms are likely to cut down on their spending. Among other sectors,
manufacturing and financial institutions are moderately vulnerable. If the service sector takes
a serious hit, India may have to revise its GDP to about 8 to 8.5 per cent or even less.
Lokendra Tomar, senior vice-president, Integreon, a BPO firm, says the US recession is
likely to have a dual impact on the outsourcing industry. Appreciating rupee along with poor
performance of US companies (law firms, investment banks and media houses) will affect
the bottom line of the oursourcing industry. Small BPOs, which are operating at a net margin
of 7-8 per cent, will find it difficult to survive.
According to Dharmakirti Joshi, director and principal economist of CRISIL, along and
severe recession will seriously affect the portfolio and fixed investment flows. Corporates
will also suffer from volatility in foreign exchange rates. The export sector will have to
devise new strategies to enhance productivity.
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COUNTER STRATEGY:
Karthik Ananth, senior consultant, business development, Zinnov, says there is already a
shift in business strategies of corporate India. Large IT and BPO firms have started looking at
other markets like Europe, and even the domestic market, to spread their risks and reduce the
impact of the rising rupee. This can be best seen with Infosys setting up an India centric
team.
K. Ramachandran, head, advisory desk, BNP Paribas Private Banking, says Indian
companies will have to adopt a multi-pronged strategy, which includes diversification of the
export markets, improving internal efficiencies to maintain cost competitiveness in a tight
export market situation and moving the product portfolio up in the value chain to impart
resilience.
The IT sector too is keen to defend its position. R.S. Rethinasamy, vice-president, Finance
Aditi Technologies, says that in case of a full-blown US recession, the onsite staffing
business will see a decline in sales and profit. "At the same time, it can increase the offshore
work. Recessions at this juncture may not last for more than two to three years. Smart
companies will continue to make investments so that they can be ahead of the competition
when the US economy comes out of recession", he says.
This means corporate India will have to spend a lot more to develop market and supply chain
links in alternate markets like Asia and Europe. Experts say the export dependent sectors of
the economy need to re-focus on local demand and income from non-dollar economies.
The European, West Asian and the African countries may offer viable short-term alternatives
to our export-dependent sectors. BPOs, for example, will have to re-negotiate with their
clients and fix appropriate price for their services.
Can India be a market option? Zinnov says IT firms can definitely find a market in India, but
the deal sizes are likely to be small. India has a huge, small and medium enterprise base and
it is the right time to tap this segment. As for automotive components, consumer electronics
and mobile devices, they have already found a market in India and have also started looking
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at tie-ups in China and other BRIC countries.
IMPACT OF RECESSION ON THE WORLD ECONOMY
There is no dearth of information being offered in the mainstream press on the state of the
economy. If anything, you'd have to go out of your way to avoid being hit by the current
barrage of "everything is just fine" economic reporting and constant repetition of "the
economy will continue expanding." But is this necessarily true? If not, how would we
discover the true underlying state of the economy?
Yet despite this obvious fact institutions dole out millions of dollar each year to pay their
legions of economic forecasters to tell them what they see in the rearview mirror. At the
same time, business leaders and everyday citizens base their buying and selling decisions on
what these academicians see in their extremely limited crystal balls.
The problem with looking at the economic indicators is that for the most part the data only
show what has happened in the recent past and cannot be used to predict what is going to
happen in the foreseeable future with consistent accuracy.
Another tendency of the mainstream economist's approach is to be as optimistic as possible,
especially when the economic data is mostly positive (as it has been of late). This is probably
the biggest pitfall of mainstream economic analysis -- falling victim to the "sunshine and
lollipops" syndrome. (This is all the more true when the economist is employed by a major
financial establishment as the institutions are always trying to present the rosy picture for
their clients and for the general public).
So how can one analyze the economic indicators and at the same time avoid the basic pitfalls
described above? First and foremost, by keeping in mind at all times the single most
important truth of economics: the Fed controls the U.S. economy through its regulation of the
money supply. And it is through the rate of change increase or decrease in money that the
economy either rises or falls. All other considerations are germane in comparison to this one.
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The 12-mo. rate of change MZM chart (not shown -- above chart is plain MZM courtesy of
BullandBearWise.com) shows a somewhat troubling and sharp pullback from the highs of
2001-2003. The Fed of course had been heavily pumping the money supply since 9/11 and
that money kept the economy afloat during the 2000-2002 bear market at a time when it was
sorely needed. But now that the financial markets have recovered from the 2002 lows and
commodities prices have soared beyond the consensus, the Fed has responded by
dramatically slowing down money growth. One respected analyst likens this to the doctor
taking a patient off the respirator. But there is always the question of how the patient will
respond if it is done too soon. We'll soon find out, probably by the fourth quarter, what the
outcome will be to the economy. My guess is that we'll see slowdowns in several key areas,
including the red-hot homebuilding sector.
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Speaking of homebuilding, below is the latest chart of U.S. housing starts, also courtesy of
our friends at BullandBearWise.com. You'll note the very pronounced upward spike in new
home starts recently, which was in reaction to the improving economic news from earlier this
year. This is plainly a blow-off type move as the housing market is reacting too
enthusiastically to what is essentially an after-the-fact situation. As we wrote in a
commentary last week, many of the new condos and town houses now being built on spec
will undoubtedly have a difficult time being sold if by later in the year the economy does
show signs of slowing down. As Bert Dohmen has pointed out, buyers can rescind before
construction is complete in most states which means many of these "pre-sales" can be
cancelled.
The extreme consumer and producer optimism reflected in the housing chart can also be seen
in the charts of many key economic indicators, including factory orders. This exuberance is a
delayed reaction to the recovery that began in late 2002 as it usually takes 2-3 years for
public psychology to respond to shifts in the economy. Will this turn out to be a case of
everyone getting too bullish and making major investments at the wrong time? An economic
slowdown need not be severe in order to have a negative impact. From a momentum or rate
of change standpoint, a slowdown will seem to be exaggerated by comparison of the extreme
bullish recovery of the past two years (e.g., a car traveling at 90 mph suddenly forced to slow
down to 55 mph -- a normal speed -- will seem very slow in comparison).
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Next we turn to the ultimate leading indicator for the economy, the stock market. As Charles
Dow used to say, it's the "bloodless verdict of the market" that determines the waxing and
waning of America's great financial system and economy. Yet how many mainstream
economists take this into account when they perform their intricate analysis of the economy?
The stock market is also largely influenced by the Fed through its money supply and
securities lending operations and the currents that will eventually ripple through the economy
first take their toll on the stock market. As Dow Theory states, the Dow Industrial and
Transportation averages are the leading barometers for the business world.
Already the effects of the rate of change slowdown in money supply are being felt in the
equities market. You can see the overhead resistance since the 2000 broad market top is
starting to weigh against the market once again as the Dow 30 index has failed so far to
overcome its yearly high from four years ago. While the Wall Street press keeps hyping the
fact that the market recently made a 3 1/2-year high, they conspicuously stop short of
mentioning that the 4-year high is far more important from a historical standpoint. The stock
market needs to make 4-year this optimism by buying second homes, buying extravagant
luxury items, and in other ways when they may well come to regret these investment
decisions in the months ahead.
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CAUSES OF REACESSION
Dating back to 1997-98, the economies of various countries of Asia such as Thailand,
Malaysia and Indonesia suffered major economic crisis due to huge investment in real estate.
The money for investment came from not very renowned foreign sources and thus it led to
crisis due to poor banking practices. Meanwhile Crony Capitalism (where a borrower is
backed by the government. For example, a president’s son could open up a bank easily and
attract borrowers to involve their money as it would be in safe hands due to official
connections behind) came into being. With these crisis in existence, the Asian countries soon
realized that there requires a need for Foreign Exchange Reserve also called Forex Reserve.
Forex reserve deals with conversion of currencies between the countries and thus allows easy
money flow. As a result, Asian countries started to buy a lot of reserves and the U.S.
securities to build a good foreign exchange reserve from international banks. Thus, the
countries made a tendency of saving as much money as possible and expenditure became
much lesser. The global demand crumpled and led to an imbalance in the global economics.
According to many illustrious economists, today high Forex has become one of the very
important reasons for the current recession. If today recession has taken place, the Asians
share the blame too. Let me explain it to you.
After 1997-98 crises, the Asian economies started to buy the U.S. securities as mentioned
above. This led to dispense of dollars into the U.S. The American economy got so flooded
with dollars that it needed an outlet. The outlet came in form of a borrowing and spending
splurge. The U.S. financial system works that whatever loans or schemes they offer, hides the
flaws and risks with such erudition that a borrower is lured to buy them.
The two main reasons that attracted the borrowers were low interests and huge funds that
helped easy loans for people. With such attractive promises, people took more and more
loans to build houses and invest money. Since there was surplus amount of money in the
banks, all the terms were relaxed and the demarcation between the prime and subprime loans
28
came at par. Banks merely looked for borrowers irrespective of their background, returning
capacity and poor credit history. Borrowers were lured with incentives and bonus offers. The
interest rates were also kept low initially and were meant to increase after the initial period.
Despite of these borrowers continued to buy even those with a poor credit history called
NINJA (No Income No Job No Assets). The house prices started to soar due to huge
investments. The splurge proved a good time for all. The lenders and borrowers believed that
the interest rates that would increase gradually or the soaring house prices will help in
recovering of the loans. In case the borrower is unable to pay the interest, the houses could be
sold off until the prices are soaring.
Now begun the complication when the overbuilding of houses caused a decline in the prices
thereby grasping the returning capacity of the borrowers. The borrowers had no money to
repay the loans and meanwhile the interest rates continued to soar. The situation became
worst when the loan amounts exceeded the total cost of the house and gave way to the
current recession. Recession in economics means a general slowdown in economic activity in
a country over a sustained period of time, or a business cycle contraction. During recessions,
many macroeconomic indicators vary in a similar way. Production as measured by Gross
efficiencies and reduced costs all create a compelling argument for implementing HRMS
systems. For the HR department, these technologies provide the potential to break away from
its administrative quagmire to become a front-line function embracing more strategic
responsibilities that positively impact the success of the enterprise. Once time-intensive
processes are streamlined, HR professionals are freed up to focus on achieving full workforce
optimization, a key source of competitive advantage and, ultimately, profitability, as it means
resources can be aligned with the company's business goals and used strategically.
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STRUCTURE OVERVIEW
The Salary is an overview of the prevailing compensation & benefits structure and their
associated level wise entitlements included in the employees CTC (Cost To Company).
Basically employee compensation includes 4 broad heads.
SALARY COMPONENTSSALARY COMPONENTS
Employees covered under bonus will be eligible for utility allowance @ 15% of basicEmployees covered under bonus will be eligible for utility allowance @ 15% of basic
salary. salary.
Employees covered under superannuation will not be eligible for utility allowance.Employees covered under superannuation will not be eligible for utility allowance.
Employees in level 6-8 of Nanjangud will not be eligible for utility allowance.Employees in level 6-8 of Nanjangud will not be eligible for utility allowance.
Company housing – Available only at Noida & NCR Company housing – Available only at Noida & NCR
Housing and free electricity units will be provided to the employees as per Housing and free electricity units will be provided to the employees as per
entitlement. entitlement.
In case of non-availability of the entitled house, the employee may reside in a In case of non-availability of the entitled house, the employee may reside in a
lower category flat till the time an appropriate accommodation is available. “In case lower category flat till the time an appropriate accommodation is available. “In case
employee is a bachelor or is traveling for short duration, the old bachelor’s employee is a bachelor or is traveling for short duration, the old bachelor’s
accommodation is allotted.”accommodation is allotted.”
Free electricity units may be accumulated within the post which they will Free electricity units may be accumulated within the post which they will
lapse. Usage of electricity over and above the free units will be borne by the lapse. Usage of electricity over and above the free units will be borne by the
employee.employee.
Employee must maintain the original building structure, the fixtures and Employee must maintain the original building structure, the fixtures and
internal fittings provided along with the company house.internal fittings provided along with the company house.
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All houses come with basic fittings including geysers, electrical points, internet, intercom etc.All houses come with basic fittings including geysers, electrical points, internet, intercom etc.
Brokerage amount is paid only once during the tenure of the employees in the location.Brokerage amount is paid only once during the tenure of the employees in the location.
Employees, who do not avail the company leased accommodation, will not beEmployees, who do not avail the company leased accommodation, will not be
In case the rent amount is higher than 50% of the basic salary, the differenceIn case the rent amount is higher than 50% of the basic salary, the difference
will be borne by the employee and deducted from the monthly salary.will be borne by the employee and deducted from the monthly salary.
In case the rent amount is lower than 50% of the basic salary, the differenceIn case the rent amount is lower than 50% of the basic salary, the difference
will be added to the taxable salary of the employee as HRA.will be added to the taxable salary of the employee as HRA.
The advance and security is re-coverable from the executive at the time ofThe advance and security is re-coverable from the executive at the time of
separation /transfer from the location.separation /transfer from the location.
In case of increased leave entitlement, the employee may move to a higherIn case of increased leave entitlement, the employee may move to a higher
lease accommodation or add the increased amount to the monthly salary as HRA.lease accommodation or add the increased amount to the monthly salary as HRA.
In case of transfer, the employee must settle all accounts of theIn case of transfer, the employee must settle all accounts of the
accommodation and furnish a no. dues certificate from landlord.accommodation and furnish a no. dues certificate from landlord.
All deductions from the advance/security and expenses related to repair ,All deductions from the advance/security and expenses related to repair ,
maintenance and upkeep of the accommodation will be borne by the employee.maintenance and upkeep of the accommodation will be borne by the employee.
In case the landlord has a financial claims at the end of the lease (societyIn case the landlord has a financial claims at the end of the lease (society
charges, damages) etc over and above the employee entitlement, it will be borne bycharges, damages) etc over and above the employee entitlement, it will be borne by
the employee and may be recoverable at the time of separation /transfer.the employee and may be recoverable at the time of separation /transfer.