The Financial Crisis

The global "crisis", "slowdown", "recession", (pick another depressing and scary descriptor) is certainly making its presence known in India at the moment, though not nearly as much as it seems to be in other parts of the world (namely, my home in the U.S.). My experiences with other business students here have revealed uncertainty, nervousness, and frustration, and professors at ISB often discuss the global financial situation in classes, making theory more pertinent to our lives at present. The crisis is presumably affecting the people with which I've interacted in India in two major ways:

1. Access to jobs (ISB students)
2. Access to capital (businesses and individuals)

Access to jobs:

Students at ISB are in a one year program, so without internships and both the first year and second year opportunities to recruit, the stakes are high during the winter terms (January-February). The on-campus placement process is nearly complete, and roughly 25-30% of the class has a job, according to unofficial reports from students. Although no official placement figures have been released, students have discussed fewer "short list" or "closed list" spots to interview, fewer offers, and lower salaries from companies. For the students that have worked and lived in the U.S. or in Europe prior to attending school, the difference in salaries between the Western companies and those in India has been a large frustration, and going back to the U.S. from ISB is particularly challenging given the current environment. My assumption is that the situation is bleak at all business schools right now, but the ISB students are nearing the end of their time here (graduation is in just over one month), and the pressure is building. In my Behavioral Finance course, the professor (here to teach from Chicago), asked the students to raise their hands if they had been placed, and of the 40 in the class, no more than 10 raised their hands - a sobering picture of the crisis taking its toll on some of India's best future leaders.

Despite the pressure and anxiety though, my impression is that the discussion about jobs, placements, and the downturn in the global economy is much more frequent and serious in the U.S. (from talking to friends at Duke) than at ISB. Perhaps this is because students in the U.S. have seen the change in B-school job prospects decrease over the last two years, whereas the ISB students entered school when the crisis was beginning. Maybe the American students have seen more daily reports on unemployment figures in the U.S. and have watched their investments plummet, creating excess anxiety. In any case, though the situation is dire at our exchange school, the worry isn't as palpable as at home.

Access to capital:

I have been surprised to see Hyderabad continue its pace of business, construction, and growth with relatively little change in the past 3 months. Whereas I am bombarded with pictures of "going out of business" signs, foreclosure postings, and ever-growing unemployment lines each time I read a U.S. newspaper, I do not sense the general unease of the population in Hyderabad like I do in the States. Even as I write this posting (at 8:00 am on a Sunday morning), I can hear construction workers hammering metal and moving large rocks one of several visible construction sites from campus. I have yet to see any "going out of business" signs in Hyderabad or Kerala, and our multinational corporate neighbors here, Microsoft and Infosys, continue to buzz with activity each day and night when their employees come and go.

A month ago, two leaders of developing world projects for major U.S. philanthropies were on campus to speak about microfinance and social entrepreneurship. They both argued that while developed economies are being hit during the crisis (as well as the people that work and invest in these economies), many small, undeveloped or developing populations have not been harmed. Because capital was not readily available in the past, because investment and savings options were unheard of, and because of the lack of connectivity to the developed world, these people and economies 1) didn't have as far to fall, and 2) were not well connected enough before the crisis to feel its effects. I'm sure that other theories exist to counter this opinion, but I was surprised (and a bit relieved, to be honest) that in some areas - typically the worst-off to begin with - people with very little are not being stripped of what they do have.

I'd love to hear your thoughts, comments, etc. Enlighten, argue with, and/or agree with me!

Note: After posting this entry, I received a link to an Economic Times analysis of the job situation at ISB. Perhaps my reports from students were lower than the real numbers, which are reported to be more around 50%. Sorry!

Note #2: Just yesterday, the Career Services department reported via email that 41% of the current students seeking jobs have been placed (with one month to go until graduation).