From the days of having 2-3 jobs on hand, ITES employees are facing the challenge of chasing non-existent jobs. Get wise with your life management in tough times
A couple of generations back, the biggest worry of your career was landing a job. And then, one was more or less assured of security for the next thirty-five years or so until retirement. Today, your stability depends not just on you, but your company’s financial health and practices, the state of the economy as a whole, and the state of finance of the company’s customers and the economy of their home countries. To drive home the point is the latest Nortel development.
An announcement made half way across the world can shake up our markets, and for some, shake up careers and personal lives too. The dust has hardly started to settle down on the Satyam storm, and we already have something new to think about – the Nortel bankruptcy filing. Nortel has filed for bankruptcy, chapter 11 — meaning that it has asked for credit protection from the US Government to settle dues while it restructures itself, a little like our BIFR (Bureau for Industrial and Financial Reconstruction).
Indian IT stocks promptly fell between 2-5 percent in reaction to this news, mainly because Nortel has been one of the large outsourcers of IT to India. In fact, it was also one of the first companies to start outsourcing to India and practically every outsourcer is a vendor to Nortel.
Other than Sasken, which depended on Nortel for ten percent of its revenues, companies have said that their exposure was too little to make any significant financial impact. But that is in percentage terms. In absolute terms, 0.5 percent of $ 2 billion (Infy revenues) is around $ 20 million, while Wipro’s annual revenues from Nortel is around $ 25 million. Even if Nortel pays off all its outstanding dues, future business is likely to be much lower. Sasken had around 300 people on Nortel projects and if one assumes that the others too had anywhere between 250-400 people, then it is that many jobs lost for the Indian IT industry.
There is nervousness across companies about more nasty surprises, given current economic conditions.
Suddenly, the IT industry is not as coveted as it used to be, as the downsides to the industry are being unfolded practically every week. Youngsters have been reported to be declaring that it was far better to join the good old stable government sector, rather than live with the uncertainty. A friend said that her brother-in-law in the US routinely checks his mail on Sunday evening to make sure that he had a job to go to on Monday morning!
However, the uncertainty is not going to go away and we simply we have to learn to live with. A few golden rules to keep in mind:
Do not give in to panic: Assess your situation. If you see your company floundering or fear for your job, start looking around before you are forced to. Remember also that some things are completely unexpected, like the Satyam fiasco. These are beyond your control and not worth worrying about.
Prioritize your financial needs: In happier days, you might have bought a car, refurnished your home and upgraded your television set all at once. Focus on the most important need and work downwards.
Gather as much information as you can about all available options: There are enough websites, newspaper articles, and consultants offering financial advice. Look at various options and choose the one that suits you best.
Spend wisely: As long as you spend only that which you know you can afford, you are safe.
Invest for the future: This period of economic slowdown is only temporary. Invest wisely for the future, whether it is in a house, a car, education, or stocks and mutual funds.
If you are an individual waiting on the sidelines for good news on the interest rate front, this article is apt for you. The good news has been pouring in on the interest rate front with repeated cuts in repo rate and cash reserve ratio. If you are wondering how this is going to affect you, below is the answer.
Now that the inflation has slipped to a manageable level, the government and RBI are keen on reversing some of their earlier moves. In addition, the existing financial crisis across the globe coupled with tight monetary policy has affected the growth of the economy as companies are devoid of funds. In the coming days, the picture could change for the better.
Hence, for those looking to avail loans, life is likely to get a lot better. To start with, home loans and personal loans are likely to get cheaper by at least 0.25-0.5%. Over a period of 6-9 months, there could be another round of fall and we may go back to the days of home loans of 10-11%. As you are aware, the rates in recent times had touched 13% level in the last couple of quarters and increased the EMI by a few thousand rupees for many. In fact, the rising interest had forced many to abandon floating rate option. Now that the noise for softer interest rate regime is getting louder, you can go back to the option of floating rate.
While banks are still not rushing to announce their new lower rates, the trend is likely to get more visible in the coming months. As of now, the fresh rates are applicable only for fresh loans and it may take a while for existing borrowers to enjoy the cut in interest rates. While car and personal loans are least affected as their rates are fixed (at the time of borrowing), the fall in interest rate is good news for home loan borrowers. And the good news is that government, with general elections round the corner, is in no mood to antagonise the voting population. That is one of the reasons why the Union Finance Minister, P Chidambaram, has taken it upon himself to induce banks to lower the rate cut. If you are a borrower or looking for a loan, you are sure to love the FM!
Everyone deals with having to wriggle out of a financial crisis at some point. If you have meticulously planned your finances and investments a temporary cash crunch may be easier to deal with. But very often we fail to do so although financial experts have been giving us this sound advice for many generations now. There may be many reasons for not being ready for such a situation either because you don’t realize it could happen to you, you simply because you can’t afford it, you spent your savings on higher education or your funds are all locked on long-term investments.
When you are suddenly hit by a financial road block the first thing to remember is – DON’T PANIC! Misfortunes hit everybody — whether it’s losing a job, an illness or just an unexpected expenditure. You still have several avenues you can explore including sounding out friends and relatives to help you tide over the situation. If that’s not the most comfortable option for you many companies offer employees personal loans at subsidized interest rates. You could check with your company to see if they offer such a facility. The biggest advantage would be that it will be hassle free when compared to a bank loan. Some other options available to you are listed below:
Bank Overdraft
Your bank may be willing to offer you an overdraft facility which will allow you access to cash in no time. A bank overdraft is relatively cheap and there is no paperwork involved in this. You can also apply for a loan or overdraft using you insurance policies, mutual funds, national saving certificates or government bonds, shares, securities etc. A loan against securities are much cheaper than personal loans and the borrowing limit may differ but is usually in the range of 60-65 percent of the values of these securities.
Loan Against Property
Offering a collateral is the best means to get a loan in an emergency as this gives the lender some security and can take care of the lender’s risk. This may also allow you to get the secured loan at a substantially lower interest rate than you would have gotten a secured loan for. If you are taking a loan against property the downside is that processing may take longer. If you need urgent cash, a loan against gold or car would probably be processed faster than a loan against property.
Personal loans
Personal loans are growing in popularity as a source of immediate cash. Although interest rates on personal loans are on the higher side many banks can sanction personal loans in less than a week. Personal loans offer consumers easy access to funds without the need to provide any security and if you already have an account with the bank it may be much easier for you to get a personal loan.
Credit card
Credit cards come in handy in a crisis situation and allow you to withdraw cash from ATMs. A credit card will usually have a cash withdrawal limit and interest charged on cash would also be different from what is levied for card usage. But if you need instant cash with no processing time, this is definitely the best option.
Moneylenders
The neighbourhood moneylender provides you money in an emergency without fuss. But you should resort to this as the last option after exhausting all other avenues. Interest rates of 50-60 percent annually are common with private moneylenders and they may take advantage of your desperation by charging hefty interest rates.
