Economy Slowdown: Effect On Industry Verticals

By Author: Constance Martinez
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Sampling Research conducted online survey with 1500 professionals and according to almost 34% percent of respondents; export sector would get affected most followed by IT sector as these two verticals are mostly dependent on countries abroad. The least affected sector would be education. ITES and KPO would also be affected according to 20% of respondents. Hence it is safe to say that education is the least affected.

According to the analysis of the Associated Chambers of Commerce and Industry of India (Assoc ham), exports target of India are likely to remain below the target for the fiscal year 2008-09. Assocham Projects that export will remain 20% below the target of $200 Billion for the financial year 2009. This does not come as a surprise given the fact that 35% of total exports from India are to US and Europe and these countries are in a recession. Exports in terms of revenues were further hit as the dollar depreciated. As fuel prices increased, costs on coastal transportation also saw an upswing. All these factors put together saw the export sector facing the major brunt of the economic recession.
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The losses borne by the export sector are in line with the kind of slowdown that the Indian IT sector has seen. Needless to say that the US and Europe are the major markets for India's software businesses. And enough has already been written on the slowdown in the IT sector. Manufacturing sector also saw a beating though not to the extent as the export and the IT sector. This sector started witnessing a downturn even before the Great US sub-prime and credit crunch emerged. This sector was facing the heat from the high inflation and fluctuating crude oil prices back home. The high credit rates were also adding to the pressure on this sector.

As compared to the month of August 2007, the manufacturing sector has grown by a shockingly low 1.1%. The same sector had grown by at least 10% last year.

The ITES is a place where foreign companies outsource all their back office operations, customer relationship management, data entry etc. India has positioned itself well to derive the benefits from the ITES market. Our country's strengths are in the form of low staff costs, large pool of skilled English speaking workforce and of course not to forget Government support. In times of recession companies look for further reducing costs and hence this sector did not get as affected some of the others. The KPO sector as the name suggests requires specific domain expertise and skills to perform high end tasks. It is a known fact that there is no dearth of such skills available in India. Many global companies outsource such high end jobs like Market Research, Analytics. Design, Legal Services, IPR, Education etc. to India. The global KPO market was estimated at US$ 1.2 billion in the year 2006. India is gearing up to capture 70 percent of KPO market i.e., a market size of US$ 12 billion. The NASSCOM (National Association of Software and Service Companies) estimates the KPO market to reach US$ 15.5 billion by 2010. Hence this sector has not felt the impact of the global economy slowdown as much as some of the other sectors.
Having said this, the global recession that we are facing this time has even affected the KPO sector though to an extent not as much as the IT and Export sector.
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