The entire world saw a massive recession back in 2008. The recession of 2008 was the most significant recession of all time that pushed the world into a pitfall. There were a number of reasons that led to this massive setback.
One of the prime reasons was Global Recession and Its Aftermath. The unprecedented number of loans that went into default as a result of reckless lending. The losses added up and ultimately led to the failure of financial institutions. There was also a housing bubble that gave rise to an excessive number of mortgage-backed securities.
The aftermath that followed was massively devastating. The stock market crashed and some large corporations failed, losing millions of dollars. This led to massive layoffs and protracted spells of unemployment throughout the world.
These consequences were dealt with by the government when they stepped in to take effective measures to combat this crisis. Experts suggest that the world is again on its way towards a global recession and there might be a repetition of what we already saw a few years back.
If you come from an IT background, then the question “How to get a job in IT during the crisis of the recession?” must have crossed your mind at least once. Let us unravel if we are really heading towards a recession and how it can impact the IT industry.
What is a Recession?
To categorically break down if the world is actually heading towards a recession, it is important to evaluate the definition of what a recession is.
A recession is a prolonged and widespread decrease in economic activity. However, there are more complex formulae that are used; usually, two consecutive quarters of negative gross domestic product (GDP) growth indicate a recession.
Economic output, consumer spending and jobs all decline. The government’s budget discrepancy increases when tax revenues decline, spending on alleviation programmes like unemployment compensation among others rises.
Are we in a Recession?
The World Bank through multiple studies has concluded that there may be a global recession in 2023 as well as other financial crises that would have a lasting negative impact on emerging markets and developing economies. The aftershock of the Covid-19 outbreak and Russia’s invasion of Ukraine is bringing about a protracted period of sluggish growth and high inflation.
How is the Recession Going to Affect the IT Industry?
The past year has been particularly harsh for the IT industry. Several companies have been indulging in massive employee layoffs as a consequence of the recession that we are approaching. Leading companies like Apple, Microsoft and Amazon have laid off many employees from all levels. Here is how the recession has already affected the IT industry:
- Companies are not providing enough benefits and pay because they are directly affected by the recession. As a result, many people are leaving their jobs on their own.
- Campus placements offered by universities to freshers are likely to suffer greatly during the period of recession as a result jobs in IT are decreasing. Companies use campus placements as a yearly ritual to increase their staff in order to meet their expanding labour needs. However, cost-cutting during a recession lowers the likelihood of new hires.
- Only if people keep upskilling themselves can they retain their jobs and increase their employability. Merely completing university degrees is not enough to retain jobs. Companies will only look at hiring and retaining highly skilled individuals during this time and want to get the maximum things done with a minimum workforce.
- Most western giant companies are collaborating with firms that offer contract resources so they may help them operate as bench resources with independent contractors on a contract basis. The goal is to cut costs, and this serves as a useful strategy.
- Many tech companies are outsourcing employees from Asian countries, particularly from India because of the comparatively cheaper labour. This is a positive sign for the Indian population, as they will have more jobs to fall back on.
This is also a signal that the Indian population belonging to IT should focus on upskilling themselves by taking up courses on data science, artificial intelligence and machine learning, among others.
What Does This Recession Mean for the Indian Tech Industry?
Economic downturns challenge the resilience of investors and differentiate sturdy companies from feeble ones. Many get completely wiped away while some continue to remain in business. Let us evaluate what this recession would mean for Indian tech companies and employees.
As already discussed, Knowledge Process Outsourcing and Business Process Outsourcing services are heavily concentrated in India. Players of all sizes in the IT sector outsource their operations to take advantage of favourable labour costs and currency exchange rates. So, a significant portion of the employment prospects in the IT sector in India is dependent on their counterparts in the US, UK and other nations.
For any US IT company outsourcing their jobs to Indian IT firms, the contract or agreement is always based on dollar terms. This is beneficial for both parties as the US party benefits from cheaper labour and the Indian firm benefits from forex income.
Indian IT firms do not typically work with conventional tech startups as clients or strategic partners. Many Indian IT firms offer services to established companies across various industries, such as banking, transportation and real estate. Despite the economic downturn, it is likely that these companies would continue to utilise Indian IT services.
Conclusion
Indian IT companies particularly have a reputation for their capacity to recover and adjust to changing situations. The Indian IT sector is robust for various reasons, such as the abundance of highly skilled people making it appealing to the west for outsourcing IT services.
This also means that constant upskilling is the key. There are many courses available both online and offline that learners can take up to increase their employability. For example, if you are looking at juggling both work and education, then you can opt for an online course.
People belonging to areas like data science are always in demand among tech companies. Eduonix has come up with an ideal data science course that will help students remain at the top of their game with their comprehensive curriculum that covers big data, deep learning and natural language processing among others. These are the most highly sought-after skills and increase employability exponentially.
Also Read: IT Team Is Inefficient: What to Do
