NRN says current recession will take at least 18 months to recover

Morning spotlight by N R Narayan Murthy (NRN) with chair person as Jerry Rao was very refreshing and what a way to start the day. I was of course sitting in the first row specially reserved for us the bloggers (thanks to Avinash Raghava @ NASSCOM for all his enthusiasm and help he has rendered – Thank You, Avinash).

Did you guys know that NRN is actually uncle of Jerry Rao (of Mphasis fame)? I had absolutely no idea about it until jerry introduced NRN as his uncle- that was a big surprise to me.

Here are the highlights of how NRN summed up the current economic situation and his advise pearls on how to deal with it,

- These are very difficult times; There were three other such ones 81-83, 89-93, and 99-02 and all were minor compared to the current one and he says this one is deep and can lead to depression and has all the makings to compare it to the one which happened in 1929 (the great depression). His gut feeling is that it might take at least 18 months before it turns around and he said which I quote “HOPE for the best but be prepared for the WORST”.

- Customers now want more for less, they are asking for greater and greater value at lower cost; Price for performance

- Enhance productivity, greater reusability and youngsters should more and more learn to interact with senior people

- Empower project managers and make them responsible for P&L, and net income margin

- He mentioned a 2X2 matrix of fixed and variable cost on Y axis and indirect and direct cost on the X axis and mentioned that we need drive to the 4th quadrant (which is variable and direct cost) as the optimum way to deal (Sorry he was too quick and I could not understand completely – hope someone will comment with the exact explanation on what NRN meant about it)

- Increase the training period – @ Infosys they have increased now the training period from 16 weeks to 29 weeks

- Manage the bench better which will obviously increase because of bench strength and keep the enthusiasm high for bench by providing good projects

- Reduce expenditure, ready for senior management to take salary cuts, focus much more on customers, bring value to customers; Almost impossible to raise capital – conserve the cash you have

- Preferably don’t lay off and honor all obligations as it is not worth to go that road as there will lot of bad will – it is better to take salary cuts and accommodate obligations; The good will goes a long way

- Budgets have been cut all over and no one wants to invest to enhance or initiate new projects

- Infosys has today increasingly depends on mathematical-heuristic-statistical model to understand what data says and make decisions or watch the productivity or decrease cost based on these metrics.

- Seems like healthcare and public sector are not as affected by recession and better to concentrate on those verticals too

- Infosys is a later entrant into public sector but his advise was to be ethical and transparent when dealing with public sector.

- On Satyam fiasco, he said that a set of best practices has to be created and followed religiously which should mitigate such chances of fraud.

- Few of the pearls he mentioned are, always spend less than you earn, choose cheaper options including travelling economy or eating at corner food junctions such as Udupi restaurants and there is nothing to be ashamed of these things, and build values and character as they will help in hard times like this.

- Spend more on sales but less on the support functions

With this they ended what was a very memorable and very clear and precise steps and very down to earth advices with no fluff what you see when other biggies talk.

I hope his advices or pearls will be of help for all entrepreneurs who are dealing with the worst recession in front of us.

Manjunath M Gowda, S7 Software

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