U.S. recession could end Asian jobs boom

Mar 19 2008 by Nic Paton Print This Article

If the U.S slips into a full-blown recession - as seems increasingly likely - the impact is going to be be felt in India as much as it is in Indiana.

American workers are not alone in fearing for their jobs as the credit-led downturn deepens. Despite its apparently booming economy, workers in India are becoming increasingly worried too.

According to the Times of India newspaper, employers, recruiters and workers are becoming concerned about their job security as the U.S credit-led downturn worsens.

IT companies, engineering firms and export-oriented industries such as textiles, pharmaceuticals and automotive components are all likely to feel the squeeze, predict observers.

The concerns are at odds with recent polls, notably by recruiter Manpower, suggesting that hiring confidence remains strong, with Indian firms in fact fighting for talent.

A survey by consultancy Hewitt Associates in February also argued that Indian workers were currently enjoying some of the highest salaries in the world, fuelled by its booming economy.

But the reality, argued The Times, was that employers and workers were becoming nervous about the ever-darkening economic storm clouds emanating from America.

IT companies would be worst hit, with one employer suggesting the country was "bound to see" a reduction in headcounts and lower wage growth.

"The benchstrength in IT companies has reduced and in some cases, completely evaporated," agreed Vishal Chibber, head of HR at recruiter Kelly Services India.

Typically, IT companies in the country maintained a benchstrength of about 20-25 per cent but were now putting as many people as possible on to live projects.

"Also, they are relying more on fresh hires rather than lateral hires to push the average salary cost down," Chibber told the paper.

People graduating from engineering colleges with deferred offers were finding they had a less strong negotiating hand when it came salaries, particularly if all they had was two to three years' experience under their belts.

Export-oriented industries such as textiles, pharmaceuticals and auto components were all potentially at risk from the U.S downturn, said Chibber.

"Some companies in these sectors are seeing a rationalisation in workforce internally. This means there is a freeze on hiring and companies are trying to make best with their current manpower," he added.