IT get worse in Kerala?

Technopark is home to 120 IT and ITES companies (like Infosys, TCS, Allianz Cornhill, Ernst &Young, Tata Elxsi, Alamy Images and Toonz Animation), including 32 start-ups, employing about 15,000 IT professionals. The total investment in the campus is around Rs 1,000 crore and the park’s annual turnover crossed Rs 800 in last year.

As the global financial and economic crisis shows no signs of an immediate letup, and the world seems set to battle a widespread downslope in prices and a monumental slump in aggregate demand, globalised economies like that of Kerala are bound to be affected more than other more insulated ones. It looks like the world is set to become enveloped in a shroud of stagnation, rising unemployment and inflation.The effect could be double-edged. On the one hand, the weakening rupee has boosted the value of foreign remittances into Kerala.

A third of the $26 billion flowing into India as inward foreign remittances , or about $8 billion, comes from Kerala expatriates, mainly in the Middle East. They, their families and their bankers will surely not be too displeased with the current turn of events.
The effects of the global financial and economic crisis has already had its toll on the information technology (IT) sector in Kerala. Last fortnight. IBS Software Services, a leading IT company which employs around 2,200 in its facility in Technopark, the State’s first information technology park, showed the door to 27 employees.Though the company was quick to explain that the action was part of a routine human resources (HR) exercise to rationalize staff by weeding out the under-performers, the links with the global economic panic cannot be wished away.

The founding chief executive of Technopark forecast in a recent television discussion that if the global economic crisis were to continue for another three months or so, Kerala could expect to see a loss of at least 1,500 jobs in the IT sector.However, he also added that if the government were to prevent job rationalisation by IT companies through pink slips, the long-term effect could be the prevention of thousands more job opportunities in the State through future expansion of IT companies.

As the global economic and financial crisis begins to export its impacts on to the Indian economy, Kerala’s IT sector ought to spruce up, remain alert and tighten its belt.