Saturday, July 19, 2008

I.T Recession & DOJ!!

Its July now in the year 2008 and most engineering graduates in India who are placed in IT companies are waiting desperately to get the date of joining (DOJ). Orkut scraps, chats , everything contains the word "DOJ"..!

After the tech-bubble of 2001, again this year IT firms are delaying the DOJ. I thought of putting some information regarding the same here!

Why the recession ?? Everyone might have read in newspapers regarding US Subprime Crisis and all. Most people avoid such news because very few have understood the Subprime and other terms!!

U can of course Google it and find out but I will try to put it as simple as possible and explain why all have to wait so long for DOJ!

In simple terms , Subprime loans are loans given to people who do not have a a good loan repayment history & has low income/job . Naturally Subprime loans are riskier and so banks asks for mortgage. (in local language- 'panayam' ) and houses were kept as mortgage mostly.

In US large no: of subprime loans were given last few years. But as interest rates increased monthly installement has also increased and many people didn't pay the installements. At the end banks were forced to foreclosure the loan. ('Japthi cheythu') As more and more people failed to repay, more and more properties were foreclosured. This was accompanied with a sudden fall in real estate and home prices. So banks couldn't get back the money which people owed them, as prices at which homes were sold were much below its estimated prices. Naturally banks suffered from heavy losses. The exact amount of losses is alarming and is estimated to be around 350Billion US Dollar. (1billion us dollar= 4200 crore indian rupees)!!!!!!!!!!!!!!!!!!!!

Big companies like CITIGROUP, Merryl Lynch,Barclays etc suffered huge losses. and this is exactly what we hear as US Financial Crisis or Subprime Crisis!!!

Now how this is related to IT recession??

IT companies in India are mainly service providers. And majority of revenue for them comes from banking & finance sector (BFSI) . BFS companies either delayed or canceled their expansion works and IT budgets, leading to slowdown in IT companies here.

There is another main reason which affected profit of all Indain IT companies. Its nothing but the appreciating Rupee. From 48ruppes per dollar to almost 38rs per dollar will affect the profit of IT companies by a good extent.

I hope now all understood why the looooooong wait for DOJ!!

US Subprime issue leading to slowdown in IT spending coupled with a appreciated rupee is the cause!!

So we can either simple sit down @ home waiting for DOJ to come, or do something useful !!

Some informations to see how worse the matter is -->


  1. only now do i hav an idea wat subprime crisis mean... gud 1 again dude..

  2. this is a good one....simple and crisp making the point clear