Bad news about recession is becoming a regular with global fears regarding an economic slowdown becoming stronger. It’s impact on the business sector, big tech, and Indian IT is becoming visible.
In India, IT service firms must brace for some bleakness as the global gloom is ‘is bound to have an impact on their growth projections,’ according to The Hindu. According to Inc42’s layoff tracker, over 15,700 employees have already been given the pink slip in 2022.
Small signs are visible, like Wipro’s net profit going down 9% since last year for Q3. Attrition rates are high for TCS and Infosys but Infosys plans to pay out 65% of the variable pay to employees for Q3, in comparison to 70% in Q2, owing to ‘pressure on margins’.
Global Recession Gloom
Already, the IMF projected a gloomy outlook, citing a continual decline in purchasing manager surveys in recent months.
American diesel supplies are reporting seriously low with shortages and price hikes expected in the coming year. In October, Reuters reported that China’s exports and imports have unexpectedly shrunk, the first simultaneous decline since May 2020, as demand is dented by COVID curbs and global recession risks.
According to Morgan Stanley, Britain and the euro zone economies will probably be in recession next year, though the US could make a narrow escape owing to a resilient job market.
Business Sector Dents
A look at the business sector not only shows gloomy layoffs, but also tech trends that are off shoots of the looming recession. For instance, the retail sector has been adopting automation tech like robots and AI based self check-out tills as a result of tight labour markets, increasing wages and consumer spending pressure.
The supply chain sector, which is already suffering, is likely to worsen with shipping group Maersk warning of slowing demand for transport and logistics.
Read more: CSR: Looming recession can hurt CSR spend
It isn’t comforting to know that filings have showed that Scion Asset Management’s Michael Burry, known for his opportune bets against housing before the 2008 financial crisis, added five new companies to his portfolio in the last quarter, which includes prison operator CoreCivic.
Big Tech Trouble
Trouble is also bound to make an appearance for big tech and layoffs aren’t the only part of it. At the beginning of November, tech giant Apple announced lower shipment expectations of its premium iPhone 14 models than what it anticipated previously following a critical production cut at a COVID-19-affected plant in China, putting a dampener on its sales outlook for the busy year-end holiday season.
Soon, Apple supplier Foxconn said it is adjusting production at the China plant, with expectations of smartphone revenue fall this quarter.