Drawing Conclusions Post 2008 Global Economic Crisis | B-School Placements Post-COVID-19 Crisis

Disclaimer: The 2020 crisis is a COVID-19 disease-induced economic crisis, while 2008 was purely a financial one. Drawing parallels from those two years may give us some clarity in the chaos. But there are various health, socio-economic, cultural and political factors (like incoming anti-immigration laws) at play in the current situation that can stir the ongoing economic crisis to an entirely unpredictable direction. It’s too soon for any kind certainty now.

Indian GDP Growth And Its Effect On Placements Post-COVID-19

Source:: IMF Data Mapper

The graph above shows the current state of the Indian GDP. When you consider it with other advanced and world indicators, India is not in the worst stage yet. However, when you compare the Indian GDP in the year 2008 and 2020, a few things are clear:

The GDP growth rate in 2008 was 3.9. In 2020, it has reached an unprecedented low by going down to 1.9%.
The GDP drop in 2008 was steep. However, in the case of 2020, the GDP decline was gradual.
Moody’s predictions for India pre-pandemic mapped GDP to grow between a 2.5-5% rate. But, COVID-19 has pushed this down to 1.9%.
Even though the Indian GDP growth rate was 3.9% in 2008, it skyrocketed to 8.5% within one year (2009). That is something that cannot be said about 2020. As per Moody’ predictions, India’s growth rate should rebound to 5.8% in 2021. A 2.7% gap is estimated if one compares with 2008’s situation.

What do these statistics and numbers tell us about the Indian economic condition in 2021? The economy will improve from what it is now, but not the way it did in 2009 if the situation remains as stable as it is now. The economic condition of India in 2021 will have a direct effect on the placements season at b-schools like it did in 2009. If you want to know how, keep reading!

Also read: The Placement Scenario Post-Coronavirus | Class Of 2019-21 And 2020-22

B-School Placement Post The 2008 Economic Crisis

Here are the highlights of what happened during the placement season after the economic crisis of 2008, a.k.a. the ‘Great Recession’:

2009 saw a very bad placement year. IIM A and IIM C, who generally bragged about 100% placements within 5 days, were only able to place 200 and 265 students out of a total batch of 259 and 290 respectively.
ISB, also one of the top b-schools in India and the world, was only able to place 250 students out of their total batch of 440.
Many MNCs and international organizations were in their lay-off mode and market-driven sectors like FMCG were a ‘no show’ in the placement drive of 2009.
With companies being choosy, many b-schools let go of their traditional threshold and invited all types of companies to their placement drive. This means even a company with only 3 crore worth of turnover was able to get hold of an IIM A graduate.
B-schools that usually used to be the hunting ground for companies like Lehman Brothers and Morgan Stanley saw maximum offers from state-owned banks like - Union Bank Of India, Bank of Baroda, etc in 2009. New players, and then e-commerce companies also visited b-schools and hired students.
In most of the top-IIMs, the average domestic and international salaries also saw a dip. In 2009, domestic salaries offered plummeted down to an average of 12.7 Lacs and an average of 41.5 Lacs internationally. In 2008 it was 17.85 Lacs and 60 Lacs respectively.
Summer placements of 2009 too saw an “okay” participation from the industry side. Finally, the number of PPOs offered in 2009 were significantly less than what it was in 2008.

All data were extracted from Business Today, Business Standard and Economic Times.

What Will Happen To Placements Post-COVID-19 Crisis?

It’s almost a given that the placement process will be very slow in the coming year. India's economic growth was anyways slowing down, COVID-19 just pushed it down to an all-time low of 1.9%. With low economic growth and lay-offs in the current times, b-schoolers will face huge competition.
Students who joined b-school in 2019 may not get their desired internships and many companies may also not offer PPOs and PPIs. This will have a direct impact on the final placement of 2021.
However, most MBA graduates get placed in the December-February season. So, there is almost a year's time for the economy to bounce back. But this will still lead to massive competition with graduates from Tier-2 and Tier-3 b-schools who may accept to work at a lower salary and other experienced professionals who lost their job in the 2020 crisis.
Certain sectors like the supply chain and tourism sector may not take part in the placement season at all.
Post-2008, a lot of permanent jobs were being replaced with “gig” workers. Gig work is typically contractual, freelancing and temp jobs. Post-2020, we will also see the emergence of new types of work and that will be mobile working. Due to the COVID-19 situation, many companies have already shifted to a work from home (WFH) policy. That may become a new job trend in 2020.

Predictions are based on what happened in 2008 and predictions done by Marketplace, Center Of Budget and Policy Priorities and Coding Blocks.

What Can We Do Now?

The best thing we all can do right now is -

Face reality: We all need to mentally prepare ourselves for the possibility that many of us may or may not get placed in 2021’s placement season. The best we can do at this time is work on improving our profile, probably take part in research or learn something new, to keep ourselves industry-ready when the time comes. Want to improve your profile? Click here.
Upskill: Economic crisis or not, highly skilled individuals are always picked. Apart from your usual knowledge and specialised domain, acquiring a skill can give you an advantage in the job market of 2021. There are various online courses on subjects like - viral marketing or people analytics. You can do that and put yourself in a better position in the job race of 2021. To learn more about specialised courses in a particular domain like HR, Finance, Marketing, etc click here.
Taking up remote working projects: Due to the transferability of a disease like COVID-19, many organizations have embraced remote working. Most of the work will now happen digitally. You can make the best of this time by reaching out to startups and collaborating on live projects with them. Want to learn about the rules to navigate remote working? Click here.
Networking digitally: COVID-19 may halt the networking we do face-to-face during symposiums, b-school competitions, etc. But, it can’t stop us from networking digitally. It's a great moment to invest time and energy in building contacts with industry leaders on LinkedIn or interacting with them live in webinars or podcasts. One never knows, interacting with them may not just give us industry insights but also help build contacts that may help us in landing a job that we may not be able to get during placements. To know more about networking click here.

Conclusion

It seems like it will take some time for things to bounce back to normal, including the economy. The repercussions of the COVID-19 crisis will have a significant impact on the market and customer behaviour, also resulting in a change in the company behaviour. In the coming few years, organizations will be in a cost-cutting and cost-saving mode, which means less jobs in the job market. Similar to what happened in 2009, some jobs will get redundant and new types of jobs with a focus on remote working will enter the corporate world. While the coming few years may not seem a good time for job seekers, it is definitely a great time for studying, entering a b-school and up-skilling. So, let's use this time to grow, nurture our knowledge and learn while staying safe!