by December 6, 2001 0 comments

The current slowdown could lead to many R&D projects being canned. Financially comfortable companies will take the lead in tech development

What a big difference there is between the enthusiasm and expectation that was at the beginning of this year and the gloom that seems to envelop the end. Looking back, it is not any technology or product that stands out as the defining spirit of the year that is ending. Rather, it is the struggle being waged by businesses to stay profitable and keep their share prices up.

Not so long ago, during the dotcom mania, the more the losses you made, the more your share prices went up. Coming just after that phenomenon, this is indeed an anticlimax. Companies have adopted many methods to remain in the black and to keep their share prices up. But ultimately, as revenues shrink, almost all of them resort to some form of cost cutting.

While manpower cutting is the most visible part of most cost-cutting exercises, what remain not so visible are the cuts made in research and product-development efforts. Take the example of Apple and Microsoft. A couple of years ago, in the midst of its financial agonies, Apple had to do away with most of its famed research division. That was the same time that Microsoft, which had the resources to spare, went about creating one. The rate of tech and product innovation coming out of both these companies today may perhaps be a direct consequence of those moves.

Generalizing on an example of one is not the best of ways, but it is obvious that as organizations remove unnecessary, or sometimes necessary, flab, and work out ways to remain slimmer and more agile, the tech landscape may be in for more permanent changes than one can imagine.

Adding a twist to the tale are the many small Indian companies that were on the forefront of tech innovation. It goes without saying that they, too, have been affected by the slowdown. Unfortunately, many of them have chosen to remain unknown, and no one has followed their well being closely.

Cost-cutting efforts could leave behind trimmer, slimmer, more agile organizations, or they could leave behind benumbed skeletons of former glory.

At this stage, when details of cost cutting (other than the number of employees laid off) are not forthcoming, it is difficult to predict which way the pendulum is swinging, and for whom.

Hopefully, those making the decision on when and where to cut will have the wisdom to understand the difference between the necessary and the unnecessary, and choose to retain the necessary.

In the absence of details, one good thing is the law of averages. At least half the decisions should be in the right direction!

Who is making the right decisions, though, is a different question. Perhaps time will tell. Perhaps, we will never know.

Here is wishing you a happy new year, albeit with a twist. Here is wishing you a better year ahead, than the one that was.

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