Current ScenarioCurrent Scenario

HITTING EVERY CORNER OF THE WORLD

ContentsContents

What exactly Global crisis & Cost-cutting is?What exactly Global crisis & Cost-cutting is?

Reasons behind the Turbulence/Turmoil/Global Reasons behind the Turbulence/Turmoil/Global crisiscrisis

Impacts on Banking & Financial sectorImpacts on Banking & Financial sector

Appropriate Cost-cutting measuresAppropriate Cost-cutting measures

Quotes from ExpertsQuotes from Experts

Global CrisisGlobal Crisis

A crisis which demolished human A crisis which demolished human peace in Corporate sector as well as peace in Corporate sector as well as Personal sector in terms of Financial Personal sector in terms of Financial performance across the Globe……..performance across the Globe……..

Cost-cuttingCost-cutting

An action takes place when An action takes place when Profitability doesn’t reach Profitability doesn’t reach expectations or needsexpectations or needs

Cost-cutting exists when there is a Cost-cutting exists when there is a poor financial stagepoor financial stage

Loose Monetary policies:Loose Monetary policies: As a result of low real interest rates in the developed economies, especially in USA, during the period 2001 – 2005, investors initiated leveraged transactions and used risky instruments in order to gain high yields.

Problems in the Housing Sector:Problems in the Housing Sector: Decline in house prices in USA that began in the first quarter of 2006 adversely affected household consumption demand and brought about increase in the mortgage foreclosure rate.

Creation of complex financial instruments in search Creation of complex financial instruments in search of higher profitabilityof higher profitability

Reasons behind the Global Financial Crisis

0

50

100

150

200

2007 Q2and Earlier

07 Q3 07 Q4 08 Q1 08 Q2 08 Q3

Global Losses

USA

Europe

As of October total losses that the international financial system has suffered reached 659 billion US Dollars.

IMF revised its global loss forecast from 945 billion US Dollars to 1.4 trillion US Dollars.

During the same period banks were able to raise up equity by 638 billion US Dollars.

Due to the financial turmoil banks faced significant losses and hence they tightened the credit standards significantly.

As of October total losses that the international financial system has suffered reached 659 billion US Dollars.

IMF revised its global loss forecast from 945 billion US Dollars to 1.4 trillion US Dollars.

During the same period banks were able to raise up equity by 638 billion US Dollars.

Due to the financial turmoil banks faced significant losses and hence they tightened the credit standards significantly.

Source: Bloomberg

World

Asia

-20

-10

0

10

20

30

40

50

60

70

20

06

Q1

20

06

Q2

20

06

Q3

20

06

Q4

20

07

Q1

20

07

Q2

20

07

Q3

20

07

Q4

20

08

Q1

20

08

Q2

20

08

Q3

USA

Europe

Source: FED, ECB

Cost-cutting MeasuresCost-cutting Measures

Every corporate is trying to reduce their Operating Costs & striving to Every corporate is trying to reduce their Operating Costs & striving to control expenditures, which are not at all necessary for them by seeing control expenditures, which are not at all necessary for them by seeing the current Scenario. Operating costs such as saving Electricity, limited the current Scenario. Operating costs such as saving Electricity, limited house-keeping services, optimum use of Stationeries, etc., Miscellaneous house-keeping services, optimum use of Stationeries, etc., Miscellaneous expenses like celebrating some of the occasions/festivals, often Outings to expenses like celebrating some of the occasions/festivals, often Outings to different places etc., should be stopped for time-being to protect the different places etc., should be stopped for time-being to protect the future.future.

Making best use of Employees with limited HeadcountsMaking best use of Employees with limited Headcounts

Some of the Corporate Planning's:Some of the Corporate Planning's:

Bangalore:Bangalore: India’s top two IT companies are employing cost cutting India’s top two IT companies are employing cost cutting measures on the HR front. In an internal communication sent to measures on the HR front. In an internal communication sent to employees, employees, InfosysInfosys CEO Kris Gopalakrishnan has urged the employees as CEO Kris Gopalakrishnan has urged the employees as the stake holders in the company to help in cutting the operating cost and the stake holders in the company to help in cutting the operating cost and controlling expenditure. controlling expenditure.

The company has set up a portal which invites employees to send in ideas The company has set up a portal which invites employees to send in ideas which could range from ensuring all computers and lights are switched off which could range from ensuring all computers and lights are switched off at the end of the day to bigger business ideas which could be incubatedat the end of the day to bigger business ideas which could be incubated. .

So far the company has apparently received over 1000 such ideas from So far the company has apparently received over 1000 such ideas from employees which are in the process of evaluating. It also says there could be employees which are in the process of evaluating. It also says there could be more such measures in the near future. more such measures in the near future.

WiproWipro on the other hand has asked the employees hired for the tech on the other hand has asked the employees hired for the tech services arm to join the BPO arm instead. This, it insists is a way to overcome services arm to join the BPO arm instead. This, it insists is a way to overcome delays in joining dates. This is being offered in Kolkata so far and Wipro says delays in joining dates. This is being offered in Kolkata so far and Wipro says that such an option could also be made available in Orissa and Hyderabad as that such an option could also be made available in Orissa and Hyderabad as well. well.

“ “We are giving time bound offers which could extend anywhere between We are giving time bound offers which could extend anywhere between 12 to 18 months and they would be then able to join tech services again,” 12 to 18 months and they would be then able to join tech services again,” says VP Talent Acquisition Wipro Tech Pradeep Bahirwani. says VP Talent Acquisition Wipro Tech Pradeep Bahirwani.

The company insists there is going to be no change in salary structure for The company insists there is going to be no change in salary structure for such employees. Employees who don't wish to take up such an offer will face such employees. Employees who don't wish to take up such an offer will face a delay in on boarding by six months. It also says it will meet all 13,500 offers a delay in on boarding by six months. It also says it will meet all 13,500 offers made for the year.made for the year.

Quotes by ExpertsQuotes by Experts

Lea Strickland,Lea Strickland,President - F.O.C.U.S. Resources President - F.O.C.U.S. Resources

Before your organization is faced with a cost-cutting Before your organization is faced with a cost-cutting situation, build the capability to understand the situation, build the capability to understand the activities and performance of the organization.activities and performance of the organization.

Make the connection between cause and effect. Make the connection between cause and effect. Measure performance and monitor what is happening Measure performance and monitor what is happening in your organizationin your organization

Prioritize projects and activitiesPrioritize projects and activities

Understand the time requirements for restoring Understand the time requirements for restoring capacity capacity

What Obama says?What Obama says? - U.S. President Barack Obama- U.S. President Barack Obama

"We came into office facing a budget deficit of $1.3 trillion for "We came into office facing a budget deficit of $1.3 trillion for this year alone, and the cost of confronting our economic this year alone, and the cost of confronting our economic crisis is high. But we cannot settle for a future of rising crisis is high. But we cannot settle for a future of rising deficits and debts that our children cannot pay."deficits and debts that our children cannot pay."

Warren Buffett’s – Warren Buffett’s – A business manA business man

advice for 2009 to understand & implement in life to face financial advice for 2009 to understand & implement in life to face financial crisis:crisis:

Tips to become Financially wiser by adopting below Financial wisdoms:Tips to become Financially wiser by adopting below Financial wisdoms:

Hardwork : All hard work bring a profit, but mere talk leads only to poverty.Hardwork : All hard work bring a profit, but mere talk leads only to poverty.

Laziness : A sleeping lobster is carried away by the water current.Laziness : A sleeping lobster is carried away by the water current.

Earning : Never depend on a single source of income.(At least make Earning : Never depend on a single source of income.(At least make your Investments get you second earning)your Investments get you second earning)

Spending : If you buy things you don’t need, you’ll soon sell things you need.Spending : If you buy things you don’t need, you’ll soon sell things you need.

Savings : Don’t save what is left after spending; Spend what is left after saving.Savings : Don’t save what is left after spending; Spend what is left after saving.

Borrowings : The borrower becomes the lender’s slave.Borrowings : The borrower becomes the lender’s slave.

Accounting : It’s no use carrying an umbrella, if your shoes are leaking.Accounting : It’s no use carrying an umbrella, if your shoes are leaking.

Auditing : Beware of little expenses; A small leak can sink a large ship.Auditing : Beware of little expenses; A small leak can sink a large ship.

Risk-taking : Never test the depth of the river with both feet. (Have an alternate plan Risk-taking : Never test the depth of the river with both feet. (Have an alternate plan ready)ready)

Investment : Don’t put all your eggs in one basket.Investment : Don’t put all your eggs in one basket.

Implement these TipsImplement these Tips -Warren Buffett-Warren Buffett

And Let us become wiser and lead a And Let us become wiser and lead a happy,happy,

healthy, prosperous and peaceful life. healthy, prosperous and peaceful life.