Will global recession impact India or not?

Though the likelihood of a recession is high, its impact will vary depending on geographies and sectors. This recession is expected to be wider than deep like Global Financial Crisis (GFC). We have already seen a slowdown in the energy and automobile sectors. However, there are also conflicting signals like hotels, airlines, malls, and ecommerce sales are witnessing strong demand.

So, consumer spending is still strong, especially in countries like India. As far as the impact of the slowdown on the Indian IT industry is concerned, it may not be that bad as large cost takeout deals will come in the way of domestic IT services firms. Similarly, a weakening rupee is expected to provide a cushion for the operating margin.

However, client-specific issues are not ruled out as a slowdown will adversely impact on some enterprises. So, industry-specific issues and client-specific issues will come with a demand slowdown. Many global enterprises are exiting several initiatives, concerning emerging technologies. For instance, Google has announced to exit from the IoT (internet of things) business.

So, it is a wider issue. Accenture results indicate that demand slowdown is here. So, all indications are there that a recession will hit the world, but it will be wider with multiple geographies and verticals being affected in different ways.

- Pareekh Jain, Founder, Pareekh Consulting & EIIR Trend