Startups feel the pinch of recession
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Startups feel the pinch of recession

By Benny Thomas   |   Wednesday, 27 May 2009, 08:56 Hrs   |    6 Comments
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Startups feel the pinch of recession
Bangalore: Today, the world is reeling under the economic downturn that has made many companies including several startups, to press the panic button. Though, the magnitude of impact differs across the verticals, there is no denying the fact that the market is shaken. "Those investors who would have invested in our company, have become reluctant to invest," says George Mathew, CEO, Emdigit Systems and Solutions, a one year old startup.

Mathew feels that recession has both negative as well as positive aspects to it. "The prices of some resources have come down after recession, which has helped us in enhancing our resources," says Mathew. Though, the positive side may bring some smile on the face, it may not last longer when Mathew says, "Our sales have been dramatically affected by the recession and we could not move to a bigger office also."

Ione Binford, CEO, Read-Ink Technologies says, "Our sales on BPO service has reduced and also we did not release our new range of products." The company was planning to release handwriting recognition products, but thanks to recession that plan is put off.

Ione apprehends that their BPO business will be 25 percent lower this year compared to 2008. According to Ione, to insulate the company from further damages, most of the overhead cost has been cut. "We have not slowed down our hiring but we have become very selective and even the salary increases are much smaller," adds Ione.

These companies are also looking for other options to maintain their revenue flow. "We are planning to start a training institute by three months," says Mathew. Even Read-Ink is also looking for greener pastures. According to Ione, the handwriting recognition product is a step in the direction to make use of more creativity to come out of the current situation.

These entrepreneurs are also changing their lifestyles to maintain the balance. Ione says, "We are self-funded and have been very careful all along." After the meltdown, there is more cautiousness as Ione says, "Now, we have cut down even on our social life styles and the travels are almost zero."

Though the overall picture looks gloomy, there are some startups like Symbiotic Infotech that is still on the growth trajectory. "Recession has not impacted us very much as our business has been growing," says Sunil Kumar, CEO of Symbiotic. The company provides SMS services to the subscribers, for which it has tied-up with many telecom operators. "Because of the recession, our astrology, news and devotional messaging service have been getting more subscribers," adds Kumar. This shows that recession truly has two faces, with the wrong face more visible than the other.

To meet many more startups, visit Startup City on June 6"

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Reader's comments(6)
1: Aren't company using recession as excuse. Atleast about Read-Ink I know that they don't have any product to release.
Posted by:Vivek - 11 Jun, 2009
2: Discussion about recession almost everywhere oozes out all the energy and impetus to growth is nil. Enhancement of resources in this article is something which has shown a positive side of recession. And its too much of recession now. It is almost declared that recovery has started. So, why not look for the positive side now and start working with new vigor….
Posted by:leena - 28 May, 2009
Hi, recession is here and now.Yes you are right, it is declared that recession is over---but that is declared by Government, not anyone else.Don't believe all that is declared , especially in the media since they are paid to say what they say.Now some big companies will fold up in the USA which will have a severe effect on us.Wait for this to happen.
Better prepare yourself for such an eventuality.
Caution is better part of valour.
santosh Replied to: leena - 31 May, 2009
plz,mail me about global recession in india today?
shambhu kumar Replied to: santosh - 19 Jun, 2009
5: Its nice to see people taking the recession as an opportunity for growth or introspection. Even though its impacts have been largely negative, its quite funny to see blooming businesses in this gloomy picture.
Posted by:Punit J - 27 May, 2009
6: Recession has really made everyone's life a struggle, with the job losses and other side effects, recession has made its mark on the people. These startups should look for alternatives to survive in this storm.
Posted by:Hari - 27 May, 2009