How funny we keep seeing this cycle of ups and downs…In an up we believe there will be no downs…and in a down we believe there will be no up!

I thinking cycling and running – two things that I do help you handle such situations well! If it is a route you know (or you are learning) you realise that an up is followed by a down…and so in life, markets and economics!

It is also easy to understand – in a boom you can increase prices to whatever levels you want, nobody complains. So you increase costs, reduce discipline….etc. then the recession sets in. There is a slow down – again easy to understand the raw material supplier knows he can sell to 4 other manufacturers, so he does not care, he keeps increasing prices…

When there is a recession and there is a need to reduce costs, there is too much pressure on Managing Directors to do something.

In fact what he does NEED NOT HAVE ANY GREAT IMPACT ON THE P&L, BUT IT SHOULD LOOK GOOD. So these are the things they do:

1. Once upon a time they would say…mobile bill will not be paid…(now I guess this would be stupid).

2. No paper cups in the canteen – people should bring their own ceramic cups.

3. Travel should only be by Y class.

4. No more fresh recruitments

5. As far as possible meetings should be done on phone / video phone…and travel should be reduced.

etc. etc….!!!

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  1. It goes even further:
    No toilet papers
    Limited supply of mineral water
    —and more ridiculous things

    The logic being “these things don’t impact the cost but are symbolic to show that we are into cost cutting mode!”

    But the unfortunate thing these changes are most of the time irreversible even after recession.

  2. .’ No paper cups in the canteen – people should bring their own ceramic cups.’

    good one. Why ceramic I would have said steel cups :), less chances of breakage!

  3. No paper cups is good even if you are not cost cutting.It has an enormous environmental impact. Overall cost cutting keeps thing in perspective otherwise companies tend to gain too much fat. From an IT perspective, every grad out of college thinks he is entitled to a six figure salary and a business class ticket to US, skills not withstanding. Before the 2008 recession investment banking (even IT divisions) were a know for their vulgar excesses. But that’s changed now.

  4. I can see the cost cutting effects very clearly.

    1. No Bus service
    2. No Hike althouth average inflation is above 10%.
    3. Variable Pay cut
    4. No Fly or Restricted Fly
    5. No Paper inside printer
    6. Shutdown AC for 2-3 hours in a day
    7. Canteen close due to some unknown reason.
    8. Mostly mental torture upon emplyee that you may loose your job anytime.

  5. I am really curious to know what was the impact of recession on middle management layer in IT companies and finannce companies. Though hiring is freezed, does people up the corporate chain enjoy immunity?

  6. sources i am looking at tell me that recession isnt showing up on the data in the US. there is actually an uptick. the fed has caused another crackup (false) boom.

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