There are always the obvious lessons in a downturn about the need for cost-cutting and belt tightening, but to me, the most important lesson is to use the downturn as an opportunity to cement the relationship with your employees. For, at the end of the day, the most critical resource in any knowledge industry is people.
Despite the experience of 2002—when a slowdown in the information technology, or IT, business and subsequent bounce back created shortage of talent in the industry leading to high attrition levels and big jumps in salaries—most companies have not done anything about it and have largely confined themselves to taking steps to trim the fat, so to say. That is often penny wise, pound foolish.
One company that did all it could to retain people, even through a "life-threatening" crisis, was Satyam Computer Services (which Karnik was briefly Chairman of when it was brought out of an accounting scandal and sold). This has paid off, as the company (now Mahindra Satyam) is now back on its feet. One of the major reasons why it survived—unlike other such cases where the company just vanished—was the loyalty and commitment of the employees.
The underlying factor for this was the company's long-time emphasis on investing in recruitment, training and motivation. In the worstpossible crisis with big doubts about survival, Satyam employees performed so well that customer after customer saw a quality of service far above service level agreements and better than in the past.
Second, and slightly in reverse, the slowdown is also a great time to try and get talent, particularly from outside the country. This is because the downturn has affected other countries more than India and many—particularly in the developed countries—have either lost jobs or have taken pay cuts or are just unsure of the future. They see excitement in India and future growth here. The best way to enter new markets or industries is to hit the ground running and to do that you need people who have been there and who know these markets.
Only few companies, however, have capitalised on this and many have lost out on this chance.
— Kiran Karnik, 62, Ex-President, NASSCOM
(As told to E. Kumar Sharma)