SECTORAL JOB PROSPECTS – 2009

Within a few days of joining an MBA course students are introduced to a very popular theory by Abraham Maslow which is called the “ Maslow ’s theory of needs”. The theory states that every human being has a hierarchy of needs which are PHYSIOLOGICAL, SAFETY, SOCIAL, ESTEEM and SELF-ACTUALISTION. He states that as one set of needs are fulfilled, the person moves on to the next level in that order and the previous need does not motivate him anymore.

The reason why I remember Maslow now is simple. Every corporate or business entity in the world is delivering a product or service that aims to satisfy one need or the other, either directly (Business to Customer, B2C) or to another entity(Business to Business, B2B) which in turn repackages it and delivers to the end user. People in general, flirt with higher level of needs when the times are good and are quickly forced to come back to the basics when the going gets tough. No wonder, during boom times, luxury products which serve no other purpose than to pamper to the egos of self-fulfilling consumers (self- actualisation), do well.

Now, if I go by the assumption that 2009 is not going to be a good year, then there are some specific sectors which will directly stare at bad times as they are simply addressing self-actualisation needs. They are

• Travel and tourism
• Hospitality (Including clubs, resorts, beauty salons, gyms etc)
• Aviation
• Luxury housing
• Luxury products (in clothing, durables, FMCG and others)
• All entertainment (malls, cinemas, high end eateries, amusement parks etc)

There are other sectors which are investment related and will be affected in bad times. For ex

• Funds and brokerage (including real estate brokerage) houses
• Investment banks.

I have of course generalised so far and will now come to the specifics and will look at some sectors which have created maximum jobs in Bangalore .

INFORMATION TECHNOLOGY:

SERVICES: The on-site and offshore debate still continues in US. US companies, particularly those which have been bailed out with the Fed’s package will be under pressure from the Obama govt to give jobs to the locals. This possibility will take another month or two to unravel. That apart, prospects for the major IT services verticals are as following.

• BFSI SEGMENT: Demand for new services will be limited and most clients in this space will look only for maintenance while trying to re-negotiate billing rates. On a positive note, since some large banks / FIs are merging both in US and in Europe , integration deals will be on offer . Best of IT service providers, whether Indian or Foreign, will compete for these. Since all of them have a presence in India and since outsourcing still remains a favoured approach, these integration deals will save some jobs in BFSI. But billing rates will be under pressure and hence the margins and the salary hikes.
• TELECOM: The world over, telecom service providers have been making money not on basic voice telephony but on value added services. Global recession is expected to hit this space hard.
• RETAIL: Same as telecom.
• AUTO & ENGINEERING: Expected to see a big slump in new deals.

PRODUCTS: The last 5 years have seen an unprecedented number of start ups in the IT product space armed with liberal private equity funding. Many of them ventured into futuristic technologies aimed at creating exotic products and applications. All such firms with no top line and bottom-line to boast of will find 2009 to be a cruel year. Their already stretched balance sheets will collapse in the face of liquidity and funding crunch. The same fate awaits semi-conductor and chip makers all over the world or firms in India doing R&D work for these.

TEXTILES, APPARELS and GARMENTS

In the present financial year 2008-9, India slipped from being the 3 rd biggest exporter to US to 5 th. Exports are expected to fall by over 30%. With no great domestic market to speak of, this sector will suffer big time. Same fate awaits exporters of many other products. Govt sops are not expected to help because, India just does not have the ruthless efficiency of China or the other south-east Asian economies.

RETAIL

The news which has come out till date says it all. Reliance has postponed all expansion plans. Subhiksha is on the verge of closure. Megamart is looking for long term investors. Pantaloons/ Big bazaar is desperately trying to keep footfalls at last year’s levels with all kinds of tricks like the “shopping festivals”

SO WHAT IS THE BOTTOM LINE

In spite of all the above, Indian companies catering to the domestic market will be the saving grace. Sure, they will see a dip in the growth rates but their situation may not be bad enough for large scale job-cuts. This is what comes out of a survey done by HR consulting company –MERCER in Dec 2008. Their survey states that

• Over 80 per cent of respondents expect their company's business performance to decline in 2009.
• However, nearly two-thirds (63 per cent) of companies surveyed revealed that a significant reduction in workforce was UNLIKELY.
• But as much as 83 per cent of companies expect salary increases in the coming year to be lower than originally planned by them.
• Only 19 per cent of survey respondents are considering the more drastic step of freezing 2009 salaries at 2008 figures.
• Only one in four firms expects to continue their hiring activities at or above replacement levels.

This more- or-less sums up the corporate scenario.

By

Vishnu.S.Jarugumilli

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