US Economy Officially On Life Support

The US goes in to recession, what does this entail for India?

Trust the Experts to echo what we have all know for a while now, the US Economy is in recession (link to Silicon Alley Insider, they have a timeline of media reports on the US recession).

Why does that bother me? In the last US recession, I had only just graduated and was looking for a job in the US. Talk about bad timing!

This recession, the climb could get steeper from here on. My own thoughts – there is a chance that the IT services – BPO driven growth in India could begin scaling back momentarily like it did back in 2000 – 2004. This is especially true considering that financial companies in the USA have been investing heavily in their Indian presence between 2005 – 2007. However, India’s growth story is largely scripted by increased productivity and consumption at home. Let me know if you have data to share that can help validate or invalidate this.

Google says they are better isolated from the recession,

“We have heard anecdotally from several advertisers that they are cutting their spending,” Jon Kaplan, director of financial services advertising at Google (GOOG) told Reuters. “People are cutting their budgets but (Web) search is not the first thing, it’s the last thing.”

Fred Wilson has some advice for Entrepreneurs, especially valid if you are in the USA.

So if you see the downturn coming as the entrepreneur I met with clearly does, what do you do? If you are a VC, I think you keep investing, but carefully. Its not a time to step on the gas. And focus on your existing portfolio, take gains where you can take them, and make sure you’ve got plenty of ‘dry powder’ for your portfolio

If you are an entrepreneur? Well that depends on where you are in your development cycle and what your goal is. If you want to spend the next five to ten years building your company, then raise a good amount of money and then put your head down and execute.

2008 will reveal what the real impact of the downturn will be on Jobs, IT spend in India and so on.

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