Waiting for a Recession Free World

The economic recession hit everyone and almost all the countries. I have written a lot about the recession in this blog and in other blogs. Although I live in Bangladesh, I have been a victim because I have seen my income suffering from blogging. I guess that at least 1 or 2 billion people have suffered directly or indirectly from the recession.

Things are supposed to be better in 2010. One month is gone in this year and things look better in USA, China and some parts of Europe. However, Britain and Japan are still suffering. The jobs are not coming back in USA. China has not back the export figures either. In fact, I am not sure whether recession will completely end in 2010. It has been very tough for millions of people like me.

Perhaps it is a very good time for doing some kind of soul searching. What went wrong? How we can prevent it? I am just worried that in 2012 it again does not come back. Things looked so great at the end of 2007 but then everything fell apart from the second quarter of 2008. I wish that again we have good economy every where. Of course, I don’t want the high oil price and high food price part again. 

Wells Fargo Free of US Government Control?

This is perhaps another indication that the economic recession is going to finish in 2010. In 2008, we saw that the banks were the hardest hit in US economy from the recession. A lot of criticisms were raised against the high officials of the banks and as a result, some of the leading banks in U.S.A had to borrow billions of dollars from US government. Now, most of them are paying the money back and the latest is Wells Fargo. It received huge amount of money. Now, it is going to give back around $25 billion.

This is a lot of money and the bank is planning that they would raise $10 billion from new shares and rest of the money they would get by selling wealth. This will make the bankers happy because the high officials of Wells Fargo will be now free from US government control. They can now easily decide on bonuses and other attractive packages for their decision makers. Specially, it is a time of Christmas and this time, I think that they will not suffer any negative criticism in the media.

Related Article

BBC

Economic Recession: 10 Similarities Between America and South Asia

South Asia is one of the poorest regions of earth and I live here. It has nearly 1.5 billion people living in 8 countries and India alone has over 1 billion people. Then there are Bangladesh and Pakistan with 150 million people each. South Asiais also home to the largest number of poor people on earth and for millions of people, life is like a struggle for getting 3 meals a day. Now, USA and other western countries are suffering from economic recession and today, I was thinking that this ongoing economic recession is bringing some changes in the life style of rich countries like USA and Japan. I felt that these changes in the rich countries may bring the people closer to South Asian people. I have made a list of 10 things in this regard.

1. Living with parents: I was reading this earlier today: Daughter’s job loss brings her home

Dear Harriette: My 24-year-old daughter recently lost her job and asked if she could move back into our family home. She has lived with her boyfriend for the past three years, and he is not working, either. Her plan is that they will share her childhood bedroom. Under my roof? I know she has lost her mind! — Diane,E. Lansing

This looks like a shocking thing for both the mother and the daughter in a country like America. However, for millions of young people in South Asia, it is a part of life. We live with our elders in most cases. This is still not shocking in any society of South Asia. I guess that some American young men and women will perhaps be forced to be like us at least for the time being.

2. Turning to Religion: In South Asia, people turn to religion in times of despair. They pray a lot. They visit shrines with the hope of getting heavenly blessing. In the Western countries, people are much less religious compared to South Asian people. Today, in BBC or CNN, I watched a report that in Japan, many people are now visiting religious shrines and donating money with the hope that it can help them. You can read this too: Americans find hope in religion

3. Unemployment: South Asia is famous for high unemployment rate. You can find many people living in the streets in the big cities. You can find many people without land in the rural areas. Well, things are not so bad in the western countries but still, many people in USA and Europe are losing jobs. Just read the two reports:

Indian Exporters May Cut 10 Million Jobs

2008 Job Losses Probably Worst Since 1945

4. Less Consumption and less Luxury: I live in Bangladesh and I belong to Middle Class income group here. My family does not own a car. We have no washing machine, just one refrigerator, no Oven. We cannot dream of going to a foreign country even once in a decade. Going to movies is like an annual event rather than weekly entertainment. I still could not get a laptop and buying a laptop is like a dream for me. The on going economic recession is forcing people in the west to spend less money. At least, car sales figures showed a significant drop.

5. Government bailout and subsidy: Let us turn our attention to politics and economy. Western government officials often prescribe to third world countries that they should eliminate economic subsidy and should not bailout any sick industry. In the last few weeks, we have seen governments in USA and Europecoming out in support (bail out) of some big banks and auto industry.

6. Budget deficit: All over South Asia, two organizations suffer a lot of criticism- World Bank and IMF. These two organizations are strong supporters of free market economy and capitalism. They are also against any kind of budget deficit. Now, in USA, Budget deficit to reach $1.2 trillion. Still, US government perhaps cannot afford to listen to the prescriptions of IMF and World Bank because of growing pressure from the ordinary people. The same thing happens in South Asia too.

7. Seeking Second Job: In my city, house rent consumers a major portion of monthly salary for most people. For example, for many years, I worked for 30 days and got the salary or wage on the first week and then brought the money to home and gave it to my landlady. Then, work for the next month and repeating the same ritual. I felt lucky when I could find a second job/project. This is a common story for many of my friends and relatives. Now, it seems that similar thing is happening in the US too: Many seek second job in recession.

8. Social Unrest: This is nothing new for us in South Asia. We are used to seeing people going to the street and violence taking place. One of the common reasons for social unrest is poverty and unemployment. Fortunately, it has not happened in America or in Europe yet but it may happen sooner rather than later if the on going economic term oil continues for a long time.

9. Uncertainty: In all the big cities of South Asia, thousands of people live in the streets. Even many middle class people cannot dream of buying a home or even an apartment. Our life is always full of uncertainty. Just a big disease is enough to make us very poor as health insurance is not that much common. On the other hand, people in the Western countries have social security and stability in life. The death of a father does not result in the end of education for the children. The economic recession has been able to bring some kind of uncertainty for them.

10. Difficult Loan: People living in rich countries have no idea how difficult it is for us to get any kind of loan from bank. Most of us do not have any credit card. So, we are often at the mercy of fate to pass on difficult times. I see that Americans are finding it difficult to get easy loan too: Mortgage rates are low, but loans difficult to get

I wish that the economic crisis finishes within the next few months but I see hardly any scope to be hopeful. If you are from a rich country then remember that millions of people living in South Asia have even worse condition than you.

(This entry was first published in January 8, 2009. Because of a technical problem, the entry had to be deleted and I am reposting again now.)

Economic Recession: What the World can Learn from Bhutan?

(This entry was originally uploaded on May 2009.)

The global economic recession is still there and most people in rich and poor countries are not immune from it. It seems that it has affected Bhutan because the country does not belong to the modern economic system. Free market and globalization both are not in the high agenda of Bhutanese government. Instead, they want to promote the idea of Gross National Happiness (GNH). It may sound foolish and laughable but the reality is that the government of country pursues this goal seriously.

I found an interesting report in The Scotsman. Seth Mydans wrote this report based on an interview of Prime Minister Jigme Thinley and Kinley Dorji (information Minister) who are among the top decision makers in the country. Both of these ministers stated that they intend to keep Bhutan this way. Of course, many people in the country are behind this idea too. Or else, there would have been a lot of conflict.

Pursuing the idea of happiness means giving more importance to spirituality.

Perhaps, the rich countries can learn something from Bhutan. They should also promote the idea of happiness among the citizens so that when bad times come people do not lose hope.

Surat diamond industry has been badly hit by economic recession

(This entry was originally published in April 2009 and it is based on the context of that time. Unfortunately, due to technical reasons, it got deleted and against it is posted now here for the readers.)

• In Antwerp, the diamond capital of the world, there are 300 Indian families, who hailed from Palanpur, are engaged in diamond trading.
• More than 70% of the world diamonds are cut and polished in Surat India. It is a $17 billion industry and cuts and polishes around $11 billion worth of diamonds every year. Eight out of ten diamonds in the world are processed in India. About 90% of these diamonds are exported to Europe and North America while the rest are purchased by Indian jewellery retailers.
• More than 700,000 people earn their livelihood from the diamond industry of Surat while 2.5 million are indirectly related to this industry. Although Indian exports only 4% of the global diamond, it represents “almost 25% value addition to imported rough diamonds.” In 2006-07, India imported $8.8 billion rough diamonds and exported $10.9 billion polished gems.
• Currently, there are around 6500 diamond processing units in Surat (another article says 5000 units). Almost 90% of the workers in the Surat diamond industry are migrant workers majority of which hails from Surat, while others come from the greater state of Gujarat including Bhavnagar, Amreli, Rajkot, Banaskantha and Ahmedabad districts.
• I already talked about the controversial child labor in the Indian diamond industry. I could not find any specific information about child labor in the diamond industry. Boys sometimes as young as ten years old work in the diamond cutting factory. Their sharp eye sight and nimble fingers make them skilled cutters and they are paid well. However, as they grow up they start to lose their sharp eyesight. Currently, the number children working in the diamond cutting industry is very little and it is not possible to get the actual information because there are many families where all the members are engaged in this profession.

The impact of global economic melt down:

• Diamond market started to show signs of crisis in October 2008. The Christmas shopping season was about to begin. For many years, the holiday season is considered to be the most profitable for diamond traders. According to Chetan Choksi, CEO, Diminco NV, prior to the season, diamond traders stocked large amount of diamonds; the biggest till date. America is considered to be the largest diamond market in the world. It consumes half of the world’s polished diamonds. Due to economic crisis, people lost their jobs and sales of diamond observed a steep 20% decline in US. A large shipment of diamond returned from USA. Many of the top diamond companies in Antwerp went bankrupt.
• This also severely affected the diamond cutting and polishing industry in Surat.In February 2009, Indian gems and jewellery export went down 35% to $1222 million compared to the export figure of $1,867 million in February 2008.
• Exports of cut and polished diamonds dropped 35% at $873 million against $1340 million in February 2008.
• According to the statistics given by Gems and Jewellery Export Promotion Council (GJEPC), export and import of cut and polished diamonds in February declined 44% in terms of Rupees due to lower manufacturing.
• In February 2009, export of cut and polished diamonds was at Rs. 42.25 billion against Rs. 52.47 billion in February 2008.
• In February 2009, import of cut and polished diamonds was at Rs. 25.22 billion against Rs.22.24 billion in February 2008.
• Overall, export of cut and polished diamonds went up 6% to $11,876 million against $12,687 million in the same period 2008.
• Between April and February, gems and jewellery export came down by 5% at $17791 million against $18,654 million in the same period last year.
• Between April and February, export of cut and polished diamonds went up 6% at at $11,876 million compared to $12,687 million in the same period in 2008.
• Between April and February of the current year, export of colored gemstones observed a marginal increase of $248 million against $246 million in 2008.
• In the first eleven months of financial year 2008-09, imports of rough diamonds went down 10% to $7249 million against $9075 million in the same period in 2008.
• Due to the economic meltdown, more than 30% of the diamond processing factories were shut down in December and production came down by more than 50%. Due to canceling orders and lack of new orders, in December 2008, Gems and Jewellery Export Promotion Council (GJEPC) asked its members to stop importing rough diamonds till December 25. (In another article, it is said that 4300 diamond processing units were shut down in last nine months till March 19, 2009.)
• C.P. Vanani, Chairman, Surat Diamond Association, said that half of diamond processing units in Surat is shut down while the rest are operating below capacity. The diamond traders did not receive any orders since last Christmas. The current amount of diamond processing is one third of what it was in 2008. Due to poor demand, many diamond traders are facing inventory build up and suffered serious losses as prices of small diamond stones went down nearly 30% since they bought them. Param Patel is the owner of Evershine Diamonds, a diamond export firm. The firm had six diamond processing units employing 4000 workers when business was good. Now, he is forced to shut down four of his six diamond processing units and asked 750 laborers and many craftsmen to leave the job.
• On December 26, 2008, Narendra Modi, Chief Minister of Gujarat, promised to secure the jobs of diamond workers. Still, it did not make any difference. Many of the diamond processing units remained shut. Earlier, Mr. Modi denied to give any bailout packages to the diamond traders. In an international gems and jewellery conference held in Gujarat in December 2008, Mr. Modi seriously criticized the traders and ordered them to work in the best interest of the workers.

Influence on the election:

The diamond workers have no jobs and no money and there is no serious effort from the government’s side. This has made them very upsent. The Gujarat Vikas Samiti and Diamond Workers Union called for a boycott of the elections. Interestingly, on February 14, 2009, Rahul Gandhi went to Surat for electoral campaign. In his speech, he said that the Indian Congress was the party of common man. Rahul Gandhi harshly criticized the big business policies of the Gujarat government. He also criticized the government’s giving facility to set up the Tata Nano factory. Post Rahul Gandhi’s speech, Gujarat government announced a “relief package” for jobless diamond industry workers on March 1, 2009. Under the package, government allowed Rs.2500 stipend and farm loan with low interest for diamond industry workers who has turned to farming. Unfortunately, the package was not well received. President of the Gujarat Diamond Foundation, the umbrella foundation heading 42 other diamond workers association, said that it was too little too late. The government did not take necessary steps earlier.

No job for workers:

• It is the poor diamond cutters and polishers that are worst affected by the recession.Forty five year old diamond cutter Ramveer Dharan told AFP in a telephone conversation that since the age of fourteen, he had been engaged in the profession of diamond cutting. His father showed him how to hold a diamond and cut it from all sides. Now, at the age of forty five, with no job in hand, Ramveer cleans the car of a diamond merchant.
• Due to economic melt down, about 500,000 jobs are lost in Surat. The diamond cutters and polishers do not get any fixed salary from their employers. Now, at the time of economic recession, they are rapidly losing jobs. According to Rohit Mehta, member, Surat Diamond Association (SDA), another 50,000 skilled diamond cutters are going to be laid off if they do not find any new markets to sell their diamonds. The Surat diamond industry employs 400,000 to 600,000 diamond cutters and polishers and many of them are now jobless. According to SDA chairman, currently there are only 200,000 workers that are staying in Surat while the others returned to their villages where they are engaged in agriculture or other works.
• Already 100,000 members of SDA requested to the government for assistance. Diamond exporters are hoping that after the national election, the government will consider their request. Political leaders are regularly meeting with diamond traders but no one made any serious promises regarding money and employment.

Diamond traders are losing their credit ratings:

The Middle East is a big market for Indian diamond producers and they are also facing a tough time over there. Recently, Credit Ratings Information Services Ltd (Crisil), the largest credit rating agency in India, downgraded the current credit ratings of some of the top Indian diamond companies that are also operating in the Middle East. As a result, banks and investors in UAE are constantly keeping the UAE branch of these companies under watch. The companies are under tremendous pressure to clear their inventories. Further downgrading of these companies would stop them from getting any financial assistance from banks and investors. Nine major leading Indian diamond companies’ credit ratings have been downgraded by Crisil. These includes: Rosy Blue Private, the number one diamond exporter to the Middle East, A Jhaveri, Fine Jewellery Manufacturing, Kama Schachter Jewellery, M Suresh Company, Mohit Diamonds, Rosy Blue, S Narendra and Shreeji Jewellery. Crisil also reaffirmed the bank credit ratings of fourteen Indian diamond and jewellery manufacturers which includes the Su-Raj Diamond and Jewellery India, a subsidiary of UAE based Indian business conglomerate Joy Alukkas Group. Crisil opined that any major capital expansion plans by the group might have an adverse affect on the firm’s credit outlook. The current economic slowdown and the fall in demand in diamonds and jewelleries are major reasons behind this downgrading.

There is still hope:

Within few months after October 2008, demand for rough diamonds dropped by 70-80 percent. This eventually caused a 50-60 percent drop in the wholesale prices of polished diamond. Retail prices dropped around 25-40 percent as sales of diamond and jewellery dropped by 20% in February. Poor demand also forced diamond giant De Beers to control its production until prices become statble and demand rises. The good thing is that many industry experts believe that the industry has already reached its bottom and stability will come; most probably in the next six months. However,Philip Claes, spokesperson, Antwerp World Diamond Centre (AWDC), said that recovery would not come till 2010.

Related articles:

Asia One Plush

Voice of America

The Indian Economic Overview

Emirates Business 24/7

The Gaea News

The Israeli Diamond Industry

Thaindian News

The Hindu Business Line (1)

The Hindu Business Line (2)

Bad Times for Nepalese Economy Due to Economic Recession

Just a few weeks ago, I wrote an entry in this blog: Impact of Global Economic Recession on Nepalese Economy. If you read it then you will notice that I talked about the possible negative effects of recession of the economy of this country. Well, at that time, not too many people in Nepal felt that their economy would suffer seriously from the economic crisis. In fact, some political leaders of the ruling party were very confident that Nepal would remain immune from the global crisis. Anyway, now it is official that global economic slowdown is hurting the economy. This official recognition has come from none other than Nepal Rastra Bank (NRB) governor Dipendra Bahadur Kshetri.

Some leaders of the ruling Maoist party were optimistic that in the ongoing fiscal year, Nepal would see nearly 7% of economic growth. Now, Dipendra Bahadur Kshetri has stated that it would not happen and not only that he is also worried about other things too. The thing to be worried about is that migrant Nepalese workers are losing jobs in Malaysia and in the Middle East and many of them will be forced to come back home. So, the inflow of remittance of foreign currency will suffer and this is not good news for the country.

There is nothing to be shocked at to this matter. However, I am shocked because of another reason. In neighboring India, inflation rate has decreased a lot because of economic recession. On the other hand, inflation rate is still high in Nepal and there is no sign that inflation rate will decrease. I also cannot understand why the NRB is reluctant to take strong measures to decrease inflation rate.

These problems are making the Nepalese Rupee (currency) weaker against dollar. A few months ago, the exchange rate was nearly 70 Rupees for one US dollar. Now, it has become around 80 Rupees. This is bad because it increases the import bill. Not only that, Nepal is under huge debt and every year, the country has to spend a lot of money for debt servicing. So, weak Rupee means that the country has to spend more money for debt repayment.

(This entry was originally published in March 2009 and it is written on the context of that time.)

Economic Recession: Indian Students Worried about Jobs

Just 6-7 months ago, some people in India thought that the country will be free from the negative impact of on going global economic recession. However, it is now clear that India is suffering from the same problem too. In fact, the export sector has been the hardest for the country. According to some reports, the export sector is going to lose 1.5 million jobs by March 2009. So, many fresh graduates or even highly skilled and experienced educated workers are worried about their future prospects.

Falling Demand both in India

I have just mentioned that the export sector has been badly affected by the global economic recession. Another problem is that things are not getting better in other countries. India received a lot of money in foreign exchange through the remittance sent by NRIs. Weaker global economy means that there will be fewer opportunities to work in other countries. In India too, big companies are trying to cut their expenses and they are a bit reluctant to go for any expansion activities. I remember that in 2007 and in the first few months of 2008, we saw a lot of reports about the expansion of Indian companies like Tata in other countries.

H1B Visa Scare

The most worrying news for Indian educated workers is that there is now strong political move in the US senate to cut back H1B Visa and number of foreign workers in USA. For example, there has been demand that big companies like Microsoft first fire their foreign workers so that more American workers can be in job.

Jagdish Bhagwati, Professor of Economics at the Columbia University, felt that it wasnot a wise thing to do:

“The people whom you’re hiring from India and from, you know, China and from — the top universities, they’re the smart lot, they’re not really substitutes for guys who can’t get jobs.”

“In terms of broader considerations like the people who are coming in on H1B visas — they’re frequently highly trained and talented people and… a lot of our progress and prosperity depend on having such people.”

Well, it does not matter what is good or bad for the US economy. What matters to most US families is to see that they do not lose more jobs. It is obvious this kind of call for reduction in the number of H1B Visas will receive a lot of support among the politicians, media and mass people.

The Economic Boom is Over?

A very bad news for Indian highly educated job seekers is that

India’s own economic boom is coming to a halt. Yes, I clearly remember that in 2006 and 2007, many people used to think that it was just a matter of time that Indian economy achieved double digit growth. Many observers like me, used to say that the high economic growth would continue for a long time in India. However, now a days, hardly anyone I the country is concerned about high economic growth.

Future Looks Bleak

In January 2009, around 80,000 jobs were lost in US tech companies. Indian companies became specialized in serving US tech companies through outsourcing. That means that any significant fall of revenue among large US companies like Microsoft can cost many jobs in India. An interesting report: Lose Your Job At IBM? Reclaim It In India . IBM has offered its US workers they could go to India if they liked and take up jobs in IBM India under local salary and local terms and conditions. This may bring more anxiety for fresh graduates in India as if some American workers really come to India for doing jobs then, it will result in having fewer opportunities for Indian students.

Students are less selective now

Perhaps the only good thing that is coming from the economic recession is that Indian students and workers are becoming less selective. Gone are the days that big companies would go after the students for getting them in their offices. Now, officials of big local and multinational companies have to started feel nervous about the future. So, fresh graduates are now trying to pursue the companies. It is natural that the students will be less choosy about the companies, salary and even the nature of jobs. Well, just 2 years ago, the companies were in a rat race to attract students from top universities. Now, it is just the opposite.

Lack of entrepreneurship

One of the things that is absent among most students and educated people in India is lack of entrepreneurship mentality. They are too obsessed with doing jobs rather than taking a risk and setting up a venture. I think that this is a very good time for Indian government to address this issue. It will not change overnight but there should be a concerted effort among the government, universities and the media to motivate fresh graduates about this matter.

Finally, I just want to say that Indian government should take this matter very seriously. The students need to have a change in mind set too.

(This entry was originally posed in February 2009. It got deleted for technical problem. Now, I am again posting it today).

Impact of Global Economic Recession on Nepalese Economy

If you are a regular visitor to this blog then you should know that I have covered a lot about the economic recession that is going on at this moment in the whole world. When we’re talking about the global recession, most of the time, mainstream media talk about rich and developed countries like America, Canada, Australia, England, France, Germany and so on. We hardly talk about the impact of the recession on poor third world countries like Nepal. I do not know the reason but I feel frustrated to see such poor coverage on countries like Nepal at the mainstream media. Today, I’d like to talk about the impact of the ongoing global economic recession on Nepalese economy.

Current Condition of Nepal

I feel that the condition of Nepal is stable at this moment compared to the past two decades. Nepal is now a democratic Republic and it has a mixed economic system in which there is a private sector but the public sector is very strong. There are some political and regional tensions but as I stated earlier, the condition is much better compared to the last two decades. The Communist Party of Nepal (Maoist) is leading a coalition government and the government is under pressure from the people to perform and ensure economic development. A Maoist led government is perhaps not ideal for the growth of the private sector but the country is doing fine at this moment.

Until now, there is little indication that the economy of Nepal is suffering from the implication of the global economic crises but I feel that it is about to happen.

Nepalese Economy: Some Basic Information

First of all, if you do not have idea about the exporting activities of the country then I would like you to visit this link: Economy of Nepal. Carpets and Ready Made Garments (RMG) are two of the most important exporting commodities. Apart from that, the country also exports from other agricultural items. Also, tourism is a very important source of earning foreign exchange just like manpower export to Malaysia and the Middle East. The foreign aid is also an important factor in the economy. About 40% people are very poor and unemployment rate is very high. Hunger, unemployment, illiteracy- all of them exist in larger scale in the country. Nepal is still an agriculture based economy. India is the major and most important trading partner both in terms of export and import.

Impact of Recession on Export Sector

The positive thing for Nepalese economy until now is that export revenue for the first four months of the current fiscal year has increased significantly. However, you have to remember that the economic recession has started to hurt the global economy seriously in the last few months. America is an important market for the garments industry of Nepal. So, any economic slowdown there will have some kind of negative impact on the industry. Carpet is beautiful but it is considered to be a luxury item in many countries. Even before economic recession, I saw reports indicating that export revenue from garments and carpet was declining.

Tourism

You may have doubts whether the export revenue will be seriously affected but I have no doubt that tourism of the country will suffer because of the economic recession. I could see a report today that that arrival of tourists in January 2009 decreased sharply (15.8% less compared to the same period of last year). Most tourists come from the neighboring countries like India. The condition of the economy in India is also not good either and that is why, I do not think that there will be a significant increase of tourist arrival from India. The same perhaps goes for Europe and America where people are less likely to travel foreign countries at this time when they are worried about their future and job security.

Manpower Export

This is a sector which has surely been affected by the global economic recession already in Nepal. Remittance is very important for neighbors of Nepal like India, Bangladesh, Sri Lanka and Pakistan. Nepal joined the manpower export bandwagon a bit late compared to these 4 neighbors. Now, Nepalese workers in Malaysia and UAE are facing uncertain future. You know that many projects in Dubai are getting closed and that has decreased the demand of Nepalese workers. Malaysian government is also cutting the number of foreign workers. In the last few weeks, almost 150,000 Nepalese workers lost their jobs in Malaysia and the Middle East. Also, the number of workers going abroad for job has decreased a lot too in the last few weeks.

Foreign Aid

Nepal imports more than it exports. So, the economy depends a lot on foreign aid. At this moment, the government needs some foreign aid badly to implement its development projects. Well, rich countries are now themselves suffering and it may become some difficult for them to keep the current amount of foreign aid to developing countries like Nepal.

Indian Factor

Nepal is a landlocked country and it is heavily dependent on India for communication and foreign trade. India is the major foreign trade partner in both and export and import. Nepalese people can go to India without any passport and work there. Indian economy is now suffering because of the global recession. So, there is fear that Nepalese economy may suffer from the bad condition in India too.

Oil Price

The only respite that can come to Nepalese economy is perhaps the decrease in global fuel price. In the last 3 years, the people in this country suffered a lot. Many times, they went to the street to protest against high fuel price. Well, the government was helpless too as Nepal is not an oil producing country.

(This entry was originally posed in February 2009. It got deleted for technical problem. Now, I am again posting it today).

I have tried to analyze the possible impact of global economic recession on Nepalese economy. Do you agree with my analysis? Do you have anything more to add? Please, do it by leaving a comment.

Challenges for Outsourcing Sector of India in 2009

2009 is perhaps a very challenging year for the global economy. The only good thing is that the price of oil is very low. The bad thing is that we are in the midst of economic recession. Satyam Scandal has come at a time when in the USA, a president who has talked a lot against outsourcing jobs to India has taken oath. Some other countries like Philippines, China and Russia are determined to take larger pies from the outsourcing revenue. Here, in this entry, I have analyzed some about the challenges that the Indian outsourcing industry may face in 2009.

Economic Recession

Indian outsourcing industry is almost solely dependent on American market and American companies. As you know, the condition of American economy at this moment is not good at all because of the ongoing economic recession. So, there is a lot of worry among Indian technology companies about the possible impact or negative impact on the outsourcing sector of the recession. I thing that it is a very big challenge but economic recession in America can have a positive impact too. Now, American companies feel the need of cutting cost more than ever before and what can be a better way to cut costs than outsourcing the jobs to India?

Satyam Scandal and Corporate Governance

It has been almost three weeks since Satyam Scandal then to the media and that people could know about it. Still, it seems that there is no end to the media coverage of this scandal. Every day, we can find new news items and reports about it and this has seriously put some questions about the level and quality of corporate governance in India. Today, “Nasscom requests members not to poach Satyam staff”.

Nasscom President Som Mittal said in an interview:

“It was decided in our executive committee meeting that other companies should not try to take over Satyam’s staff and clients, as this would affect the business continuity of the company. The employees of the company are working on different projects and it’s necessary to complete all these projects, …… “The association had put in a request to all our members, and the companies are maintaining a self-imposed restraint,”

The employees of Satyam a tough raid and frustrated and are desperate to go to other companies because they feel that they have a bleak prospect in Satyam.

Philippines

You may think that there can be no comparison between Philippines and India in outsourcing as Philippines is a poor country with all the political instability. Well, the decision makers in the country have realized the potential of outsourcing and that is why, they are doing everything they can to get more American companies outsource to the Philippines. According to a research of Everest Research Institute, Philippines expected to emerge as premier non-voice outsourcing hub. If there are few more stories like Satyam Scandal in 2009 then in 2010, we may find a significant shift in outsourcing projects to Philippines from India.

China, Nigeria and East Europe?

Eastern Europe countries and Russia have already started to compete with Indian companies in this field. Just take a look at Odesk and you will find that a large number of service providers are from Russia and they are ready to work at a competitive rate. You can find detailed information here:

2008 oDesk Russia Offshore Outsourcing Statistics Data Report

China has been trying a lot to emerge as the market leader in this field and is now in second position after India. Well, China surely has some good sides but the main problem is still the lack of large pool of workers skilled in English language. Chinese government is serious to fill up this gap and I have a feeling that China may have some big success stories in the next few years.

What about Nigeria? Nigeria is famous for online scams of sending all kinds of emails. Did you ever think that why Nigerians are related to online scams in such a large scale? Well, the reason is very simple: Nigeria has a large population with good skill of English language and some skill of Internet and then they are poor and unemployed. They are ready to work hard if they can get the taste of earning American dollar or British Pound by the outsourcing sector. I like to think that Nigeria can be a very big challenge for India in the next one decade provided that Nigerian decision makers have the same attitude and wisdom like the decision makers of the Philippines.

Read more: ‘Nigeria has great potential in outsourcing’

Obama and American Public Opinion

Just a week ago, Barack Obama took oath as the new president of United States of America. During his campaign for presidency, Obama several times said that he was not happy with outsourcing of American jobs and he would try his best to support those American companies who keep the jobs inside USA. In the last one week, I have not seen similar rhetoric from him but I think that it will be difficult for him to do a u-turn to his campaign against outsourcing. There is another factor that he has to take into account. In 2008, 2.6 million American people lost jobs and now, they hope that Obama will really do something about outsourcing and ensure that more jobs do not go out of the US. If the condition of US economy does not witness a significant improvement in the next few months then there will be more pressure on Obama to keep his promise about working against outsourcing jobs to India.

Indian Politics and Election and Uncertainty

2009 is the year of general election in India. The election is supposed to take place in the month of May. So, it is obvious that until May, everyone will be busy with the election. Outsourcing will not be a priority for the government in the next few months. Well, my suggestion for the Indian government is that they should try to work with NASSCOM more closely. They should ask NASSCOM to help the government with intensive monitoring of the global condition and especially at times like Satyam Scandal.

For many years, India followed closed economic system. In the last two decades, India opened up its economy and IT outsourcing sector witnessed impressive growth. 2009 can be a challenging year for outsourcing sector.

What do you think?

(This entry was first published in January 2009. Because of a technical problem, the entry had to be deleted and I am reposting again now.)

Life During Economic Recession: AW Blog Chain January 2009

I am writing this blog entry as a part of Absolute Write Blog Chain January 2009. I volunteered to run it and that is why, I am writing the first post. Well, I have never run a blog chain earlier and that is why, I am still some confused how to do it properly. No problem- next time, I will be better. I want to write about economic recession because I have been reading a lot about it in the next few days. By the way, just remember that this blog chain does not have any theme. So, the next person after me can write about anything she/he likes.

Enough of the introduction. Now, I can write something about the economic recession. I live in Bangladesh and economic recession has not affected us yet. Most people are perhaps too poor anyway to suffer from global recession. I have started to feel the pain because I earn my living by blogging and earning through advertising has decreased significantly compared to this time of last year.

Today, I was thinking about the possible negative impact of the recession on people in western countries. I know a person in USA whose wife lost her job on during the time between Christmas and New Year. She had a baby sitter to look after her baby and the day she lost the job, she had to inform her baby sitter that she could no longer afford to keep her. The baby sitter’s husband also got fired on the same day. It is indeed like a chain reaction.

I read in Internet that around 2.6 million people lost jobs in 2008 in USA. There is little hope that things will become better in 2009. The bad part is that the economy of almost every country is now somehow related to the US economy. For example, my neighboring country India earns around $50 billion from outsourcing and 80%-90% of that money comes from USA. Indian export sector may see loss of 10 million jobs in the next few months.

As a blogger, I am worried for the future for two reasons- I have already seen dramatic decrease in advertisement revenue for my blogs. I am not optimistic about 2009 because anticipating a bleak prospect; big companies like Microsoft and Intel are cutting many jobs these days. Secondly, if the condition of US economy does not improve then the number of freelance projects will either decrease or there will be less money on offer for these kinds of projects. May be I am wrong or may be I am too much afraid. I just pray deeply that things will get better in 2010.

Next in the blog chain is Benjamin Solah with her blog: http://benjaminsolah.com/blog/

I wonder what he will write about.

The participating blogs in Absolute Write Blog Chain January 2009:

Razib Ahmed
Benjamin Solah
FreshHell
WendyNYC
madderblue
Kat Frass
veinglory truelyana

Ralph Pines

(This entry was first published in January 2009. Because of a technical problem, the entry had to be deleted and I am reposting again now.)