Despite the slowing economy, inorganic growth is still a viable option, according to a recent survey by Watson Wyatt.
A total of 146 senior corporate functionaries participated in the survey representing industries like automobiles, fast moving consumer goods (FMCG), banking and financial sector, IT/ITeS, pharma, and others.
According to the report, over 30 per cent respondents are considering or are in the process of undertaking acquisitions.
According to Andrew Heard, Regional Head - benefit practice - Asia Pacifc, “Several companies, particularly in FMCG and pharma sectors, are actively looking at acquisitions during this downturn as the overall budget could be low this time.”
While the trend is to take a cautious approach to the present situation, a majority of the participant companies - 57 per cent from all sectors - have lowered their revenue forecast for 2009.
Cost control has gained emphasis more than ever before with about 83 per cent of all participant companies reporting a reduction in their operating expenses.
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Given the current situation, the top three clear priorities emerging for the HR function now are increased communication, restricted approach to increments and a re-look at the productivity benchmarks.
“Several companies are doing away with variable pay quotient of employees’ salary. Variable pay, that forms almost 30 per cent of an employee’s salary, are increased or decreased depending on the company’s as well as the employee’s performance. Once the economy recovers, we see a lot of shift in HR strategies, especially with regards to the variable pay. Most companies would bring down the fixed salary quotient for employees, while variable and fixed salary will form equal break-up of salaries going forward,” Heard pointed out.
Watson Wyatt’s survey also said that in such a scenario demanding a cautious approach from companies, a majority of them responded in negative to any changes in the long-term growth plans in India. The finding also corroborates a general sentiment that given the slowdown in US and Europe, Asia-Pacific region is now looked as the driver for growth.
Reviewing productivity benchmarks, lower salary increases and heightened employee engagement and communication activities emerge as the three most commonly followed approaches to survive in the present situation.