Amid the global slowdown, India has emerged as one of the fastest growing economies with a GDP of $3.1 trillion
When Jeff Bezos said, “I predict that the 21st century is going to be the Indian century”, he not only saw the potential the country had to offer, but also that it had the wherewithal to make the best of the opportunity. The journey towards establishing the century as India’s is filled with the transformation of 700 million plus digital ‘naagriks’ even as other emerging economies are experiencing a sharper slowdown.
The World Bank has revised India’s GDP growth projection for 2022-23 upwards to 6.9 per cent from 6.5 per cent, citing the economy’s relative resilience to external headwinds and better-than-expected performance in the July-September 2022 quarter. It further stated that India is projected to be one of the fastest-growing major economies. These developments position India as an attractive alternate investment destination. On the other hand, the negative discourse against foreign companies, especially big tech, preferential treatment to local organisations and inequitable policy guidelines could prove to be a hurdle to the paradigm shift.
India defied the global job loss trend and economic slowdown during the pandemic by encouraging businesses to adopt digital trade and innovative practices. Pressure from the global economic recession, particularly in established countries, has been placed on emerging markets and the businesses that were leading the way in innovation. Companies like Infosys, Alphabet, Meta, and Amazon, among others, are now forced to optimise their operations to sustain their businesses. It is imperative to let these companies optimise their businesses and allow them the space to bring in economic growth and not question their interests.
Businesses need to optimise in order to survive
In the early pandemic days, sectors like e-commerce, gaming, last-mile delivery, IT, EdTech, OTT etc. saw a huge spike and found a lot of takers. This increased adoption required rapid expansion to sustain the increased demand, and a lot of these sectors had little choice but to hire and were overbuilt – sometimes in a manner where growth was prioritised over short-term profitability. For a time, this entire ecosystem was sustainable, even though a lot of organisations were pushed to their limits.
But the consumption patterns formed during the pandemic were not set in stone. While many people adopted the hybrid lifestyle, the touch and feel of interacting and experiencing in real life led to people reverting to older patterns very quickly, where a digitally enabled world was a part of and not the whole experience. In fact, the past few months have seen an aggressive bounce back to physical activity in the form of what is being labelled as revenge travel and increased outdoor activity.
The e-commerce sector, for instance, was one of the fastest-growing sectors in the past three years. The sector saw an unprecedented run which led to infrastructure building and required a workforce at a rapid pace because of the changing consumption patterns. However, the building at such a pace and scale increased operational costs exponentially. The push that e-commerce had to make to drive adoption came at a cost to the businesses themselves, it seems. Consumers were offered discounts, easy returns and exchanges, various payment options and dependable last-mile delivery. More importantly, e-commerce evolved into a support system for the offline retail sector even as the consumers were not comfortable stepping out of the comfort of their homes. Many retailers could etch their living largely due to e-commerce helping them increase their business footprint.
Similarly, many sectors like EdTech and gaming found their consumers looking at these as an addendum rather than as the primary source of education. While this provided a detrimental hit, what tipped the balance was increasing inflation, changing global geo-political developments and a decline in consumption brought on by an impending economic slowdown. This has created a challenging situation for these organisations where global funding is drying up, people are spending less, and hence they are finding it harder to survive. This has created a situation where spending optimisation has become necessary, something which not only start-ups but also giants have become cognizant of.
Winding down of businesses that no longer are viable or optimising the manpower to enhance efficiency has run into negative headlines. Are all layoffs the same? Companies must periodically abandon old tactics and, with them, some staff to optimise their performance. This is not always bad; it helps the organisation withstand the effects of time, changing market conditions, and employment trends. It should not be forgotten that without periodically updating its personnel strength and quality, new talent will never have the opportunity to demonstrate their abilities. Layoffs might be viewed in this light as a company reorganising itself. All businesses will see ups and downs, and letting companies moderate their operations is more than just prudent. It is desirable.
India may shine amid global slowdown
In the backdrop of a global laydown and layoffs, there is a glimmer of potential for entrepreneurship. With a GDP of $3.1 trillion, India is becoming the fastest-growing economy in the world, and the contributions of new-age entrepreneurs have been significant. However, in order to flourish, entrepreneurs must focus on innovation and use downtime to optimise business operations and scale. Therefore, it is critical that they examine, re-strategise, and identify appropriate prospects to put their business operations on the right track to success.
Another aspect that can work well in favour of India amidst the recession is talent. Global companies rely on Indian skills primarily because of the cost and quality. This global slowdown might be the right opportunity to establish India as a talent destination of the world. In a time of cost-cutting and optimising strategies, global businesses could offer Indian tech talents remote working opportunities, which can be a win-win for both the employer as well as the employee.