I have seen the recession from close quarters in Britain. However, I think Indian labour markets are a bit different, not just because we don't have social security but because professional lifestyle is relatively new in India. Job loss is traumatic in any society, but it is far more traumatic when there is an element of humiliation involved and the people around you - family and friends - fail to stand by you. A big proportion of India's service sector labour force comes from families which traditionally earned their living in government service and have no way of appreciating and ascertaining the uncertainties and traumas of modern professional life. Many of India's young workforce is first generation professionals, and while they have enjoyed spectacular success much beyond what their parents could ever dream of, this contraction will extract a steep price in terms of their self esteem and how they are viewed in the society.
This is where the new management challenges will emerge from. At this time, Indians are extremely loyal to the big companies, and often define their identities in terms of their employers, their grade and their pay package. While travelling in India, I was surprised to note how many Indian executives openly discuss their grade - 'I am M1 and the lady down the lane is M3A' - seemingly oblivious of the fact that these numerals mean nothing to the audience. While the recession will make the power shift to the employers, there will be an underlying erosion of this loyalty. The ability, and therefore the intent, of defining oneself in terms of one's employer or grade or pay packet ['My CTC is 15 lakhs, and they offered 18'] will diminish. This, in turn, will actually erode the powers managers hold on their reportees.
I do hope that this will actually lead to the creation of a flatter workplace. India is a high power distance culture, where the seniors and superiors and reporting managers enjoy quite a bit of leverage on their reportees. This is evident in any work place you visit, and indeed outside the work place too. It is not unusual to notice a manager 'demanding' work outside the contracted work hours or making out of the way 'requests'. the reportees will often comply, partly because they are used to this and do not mind, but also because the manager holds life-and-death control over their selves. The manager can get you fired, a software engineer told me, even if you have done your work perfectly and diligently. The appraisal is subjective and often gives a lot of weightage on the words of the reporting manager, I gathered.
It is easy to see why. The hierarchy runs on a system of patronage, and to build a hierarchical system, each level must respect the 'patch' of the level below. You tread into the area of the manager reporting to you and you justify being overruled by your supervisor, by the same token. The morality is important, particularly to the middle class Indians, and the Hindu psyche of rebirth and accumulation of good work seem to run deep in the workplace. And, therefore, senior managers keep collecting moral brownie points by not interfering what not so senior managers do with their subordinates and keep the system going. [I must add here that there is another way of looking at this. The Indian business culture has borrowed quite a bit from the British, including the principle - 'do not embarrass'.]
What I am saying, however, is that this recession is likely to upset this cosy arrangement forever. There will be more people out on the street, and given the huge unexplored economic opportunity, more entrepreneurial efforts than ever. There will be an erosion of respect for company life, and a general acceptance, after a lot of pain, that no job is for life. There will be more focus on lifelong learning [I recalled someone once refused a plum technical position because he 'did not want to study when [his] son comes back from school'] and a lot more focus on oneself, as opposed to the borrowed identities that people live with now. This will be an opportunity for SMEs to hire good people, but they have to adjust themselves to this new reality of the independent workers. They have to stop playing the game that they long played - pretending to be big and assuming that people want only a little - and engage in this new management paradigm sincerely.
Recessions are wonderful times to create new champions. The game is being played right now.