A Study on the Impact of Recession on IT/ITES Sectors in India

the main effects of recession on IT industry in India are unemployment, decrease in salary, losses in tax and revenue of Government, profit of company and employee’s future life. Recession has direct impact on the profitability of IT companies. Due to global economic slowdown, Indian IT sector had slower growth, thereby decreasing profitability. At that time, there were no sufficient works towards software development. Companies did not achieve their profit target and were forced to go to a severe level of cost cutting for its survival. Due to this, some companies laid-off software engineers. Hence, he/she becomes a defaulter of bank loan, insurance premium, credit cards and many more leading to depression and frustration in life. This resulted in many suicide cases. A slowdown in the US economy had directly impacted the Indian IT industry very badly. Indian companies have major sources of income from the US and since the US Government stopped outsourcing, it resulted in reduction in the revenues received from income tax. Banks faced shortage of liquidity and they started to withdraw their investment from the IT Industry in India. This resulted in the falling of share markets. All the above reasons clearly prove that recession is a disaster as it resulted in sociological, economical and psychological impacts. The background to the problem is the economic slowdown in US in 2008 caused by the burst of housing bubble which engulfed the entire world in its grip. Due to India’s rapid and growing integration into the global economy, it has been hit by the global meltdown in the form of recession. In an interconnected global economy, recession in one part of the world has the potential to disrupt the economies of other countries in a major way.