Wall Street never meant much to me and I’ve actually never set my foot there. So except from being a part of our vocabulary in the same way McDonalds or AmEx is it, to me Wall Street represented a higher order seemingly beyond comprehension for a software guy like me. In fact a good part of my family lives in upstate New York, so trips are somewhat regular (yes Ella, I know it’s been a while.. :) ), but I just never saw it as a particular interesting place to see with my eyes. I mean- would I want to visit McDonalds HQ..? Somehow Wall Street gives me the same feeling thinking about it.
Now days that may all have changed. I have decided to go down there once I’m back in town. I’d just like to see what some of these people look like, that drove the entire world economy off the cliff… and I’m not going to dwell over George W. Bush or others that could have done something to avoid this disaster earlier on, given they had had the balls to do so, but no- I’ll leave that subject to others.
However, during the past few months I have spoken with business leaders from diverse business environments such as sports retail, travel agents, leisure boat manufacturers, and garment factories. The message I get is an alarming one.
To most, the economic downturn is already being felt in force. Drop in new orders for 2009, double-digit drop in month-over-month revenue from last year, and customers delaying payments, to name just some. Just from these people I have spoken with myself, the total drop in revenue must represent a good thirty to fifty million dollars worth of business lost. Now that translates into serious consequences for a lot of other companies down their chains as well, and that’s where we are right now. Are you down that chain too? 2009 is going to be very tough- maybe even flat out scary- and a lot of us will be faced with some tough decisions that need to be made with speed, to sustain our operations through that year.
My primary concern is the outlook for Sri Lanka and the Srilankan IT industry in particular, in the year to come. Srilankan IT is still fighting for “its right” to a seat at the Global IT Outsourcing Table as a serious partner and destination, and many of our businesses here are still building their capacity and capability, and may or may not have the financial strength necessary to carry on through if and when “the shit hits the fan” as we say in the army.
Add to this the overall high cost of communications and leased-line operations here (translates directly into loss in competitiveness), new suggested increase in company taxes, and the rupee heavily appreciating against most other niche currencies (including Indian rupee, Chinese Wot, and Norwegian NOK) which makes our Srilankan products either more expensive to the customer, or may force the vendor here to sell at a loss.
Currency appreciation makes our products less attractive to the market, be it tea, rubber, or IT. Those of us who are dealing with smaller countries still maintaining their own small “funny-money” currencies have probably already seen a 25-30% loss in revenue in foreign Exchange contracts, and an increase in our costs ratio. As such our prices will either have to surge or our costs will have to be cut, and from this you can imagine that companies are losing competitive edge fast.
So is this stuff all just bad? Bad Yes but All Bad? - I’m not so sure. Of course it is bad on the individual level both for the companies and the employees under siege, but where there are problems there are also new opportunities. There will be massive restructuring happening and the pathway through this and to make sure we’ll still be around, is to quickly wake up and face the new reality. Restructuring generally means a need for new products and services for the company to be able to automate, differentiate, or simply change the way their business is conducted.
There will be customers out there (maybe even more so in our field as they are forced to cut their costs in domestic operations), but our ability to create, visualize – and measure –the business value we present to our clients will be increasingly important. To the companies and management teams that understand the meaning of crisis and are willing to take the tough decisions head on, there will always be new possibilities. Think about it - some competitors will have it worse than you.. So what we all need to do right now is to get our focus right, re-assess our market approach, put the customer back in focus, get rid of any unnecessary fat in our corporate spending, and again invests in our R&D, product development and marketing. Lean and Mean is what it will be all about.
And Yes there’s a storm out there and there’s no way around it, so in deed we need to scramble for our rain gear. On the other hand- calm seas never made much of a sailor anyway.

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