How Does Inflation Impact Our Life ?

Inflation is when prices continue to creep upward, usually as a result of overheated economic growth or too much capital in the market chasing too few opportunities. Usually wages creep upwards, also, so that companies can retain good workers. Unfortunately, the wages creep upwards more slowly than do the prices, so that your standard of living can actually decrease.

Inflation hurts your standard of living because you have to pay more and more for the same goods and services. If your income doesn't increase at the same rate as inflation, you will find your standard of living declining even though you are making more. Also, inflation doesn't impact everything equally, so that some things (such as gas prices) can double while other things (your home) may lose value. For this reason, it makes financial planning more difficult.

Inflation is really bad for your retirement planning because your target will have to keep getting higher and higher to pay for the same quality of life. In other words, your savings will buy less and less, so you will need to save more and more. However, everything you buy today costs more, so you have less left-over income available to save.

Inflation has another bad side effect....once people start to expect inflation, they will spend now rather than later, because things will only cost more later. This consumer spending heats up the economy even more, leading to further inflation - this situation is known as spiraling inflation because it spirals out of control.

It is also important if you are holding bonds or Treasury notes. These fixed price assets only give a fixed return each year. As inflation spirals faster than the return on these assets, they become less valuable. As they become less valuable, people rush to sell them, further depreciating their value. As their value becomes lower, the US government is forced to offer higher interest rates to sell them at all.

What Is Deflation?

The definition of deflation is when asset and consumer prices continue to fall. This may seem like a great thing to consumers, except that the cause for deflation is a long-term drop in demand. Unfortunately, a drop in demand means that a recession is already underway, with job losses, declining wages, and an ongoing decline in the value of your home and your stock portfolio. Deflation is a result of businesses dropping prices in a desperate attempt to get people to buy their products.

Officially,deflation is measured by a decrease in the Consumer Price Index. However, the CPI does not measure stock prices, which retirees use to fund purchases, and businesses use to fund growth. It also does not measure housing prices, instead using rental equivalent. This often lags home price declines, and underestimates deflation in the CPI.

To combat deflation, the RBI executes an expansionary monetary policy. It reduces interest rates, and increases the money supply in an attempt to jump-start economic growth. In addition, the government can offset deflation with expansionary fiscal policy. It can put more money into circulation by lowering taxes, increasing government spending, and incurring a temporary deficit to do so. Of course, if the deficit is already at record levels, that tool may no longer be available.

Like inflation, deflation is very difficult to combat once it is entrenched. As businesses and people feel less wealthy, they spend less, reducing demand further. Prices drop in response, giving businesses less profit.

How Would a Recession Affect You?

In a recession, economic growth falls dramatically. The stock market declines, and usually enters a bear market. This usually causes a "flight to safety", where investors buy Treasury Bonds, which causes interest rates to fall. Employers reduce new hiring, and eventually start laying off workers.

To revive the economy, the Federal Reserve usually starts lowering interest rates to spur business lending and investment. The Federal Government may institute tax breaks to spur consumer spending.

The current economic slowdown was started by a housing market decline which itself was initiated by the Subprime Mortgage Crisis. This decline also means that existing home values have fallen by 10%. In a recession, prices could fall another 5-10%.

How It Affects You

You have probably already felt the impact on your home's value, and therefore your home equity. This reduces your wealth. You will continue to feel the impact on your retirement savings, as stock prices decline, further reducing your wealth.

The greatest risk is if you are in an industry that has layoffs, and you lose your job. If you aren't laid off, then you will probably be asked to work longer hours to compensate for the new employees who aren't hired.

As the recession continues, you may benefit from lower interest rates and tax cuts, which are applied to everyone. Normally, this would help you refinance or get a better mortgage. However, lenders have become more stringent about credit standards, so you won't benefit unless you have great credit scores.

Programmers and IT failure

IT failures are often rooted in hidden, almost tectonic forces — organizational, political, and so on — that are difficult to measure or control. However, this focus can obscure those special folks who actually create the technology we implement and use. I’m referring to programmers.

At their best, programmers are the dreamers, visionaries, and skilled artisans of technology: the real creators. In the truest sense, these great ones have advanced knowledge and human well-being in science, medicine, and many other important domains.

However, we can also point to unskilled, inexperienced, or self-centered programming behavior as a direct source of project cost overruns and delays on some projects. How many programmer-led initiatives have gone late or over-budget because developers created cool software with scant business value?

To learn more about the many faces of programmers, I sometimes turn to the Coding Horror blog. In a fun post, Jeff Atwood somewhat-jokingly describes eight levels of programming achievement:

1. Dead Programmer. Your code has survived and transcended your death. You are a part of the permanent historical record of computing. Other programmers study your work and writing. Examples: Dijkstra, Knuth, Kay
2. Successful Programmer. Programmers who are both well known and have created entire businesses — perhaps even whole industries — around their code. Getting to this level often depends more on business skills than programming. Examples: Gates,Carmack, DHH
3. Famous Programmer. This is also a good place to be, but not unless you also have a day job. But being famous doesn’t necessarily mean you can turn a profit and support yourself. Famous is good, but successful is better.
4. Working Programmer. You have a successful career as a software developer. But where do you go from there?
5. Average Programmer. At this level you are a good enough programmer to realize that you’re not a great programmer. If you are an average programmer but manage to make a living at it then you are talented, just not necessarily at coding.
6. Amateur Programmer. Being an amateur is a good thing; from this level one can rapidly rise to become a working programmer.
7. Unknown Programmer. The proverbial typical programmer. Joe Coder. Probably works for a large, anonymous MegaCorp. It’s just a job, not their entire life. Nothing wrong with that, either.
8. Bad Programmer. People who somehow fell into the programmer role without an iota of skill or ability. These people have no business writing code of any kind — but they do, anyway.

It’s easy to stereotype anyone, placing them on a pedestal or tearing down their contributions as meaningless, although neither extreme provides much value. Having said this, what do you think about the role of programmers in causing or preventing failed IT projects?

Three important post-recession IT trends

With the economy lingering on the brink of recession, understanding the future becomes more important than ever. As this photograph shows, IT organizations can expect three important trends going forward:

• Project failures. Project failures will decline as centralized, hierarchical control increases. Detailed instructions from the boss will outlaw failed projects, basically solving the problem.
• Social networking. The trend to eliminate cubicles in favor of open seating will increase, reducing office space costs and fostering community among IT workers. Real-life social networking will play an important role in keeping vital team spirit alive.
• Green computing. Recessionary economics will drive further reductions in the size of hardware; smaller packaging means lower cost. Note how screens are integrated directly into keyboard units, saving valuable desktop space while simultaneously lowering electricity consumption. Also many light ceiling light fixtures remain off, further saving energy.

Although no one can predict the future with total accuracy, pictures are indeed worth thousands of words.

The Art of the Layoff...!!!!

Take responsibility.Ultimately, it is the CEO’s decision to make the cuts, so don’t blame it on the board of directors, market conditions, competition, or whatever else. In effect, she should simply say, “I’m the orifice. I made the decision. This is what we’re going to do.” If you don’t have the courage to do this, don’t be a CEO. Now, more than ever, the company will need a leader, and leaders accept responsibility.

Cut deep and cut once.Management usually believes that things will get better soon, so it cuts the smallest number of people in anticipation of a miracle. Most of the time the miracle doesn’t materialize, and the company ends up making multiple cuts.

Given the choice, you should cut too deeply and risk the high-quality problem of having to rehire. If nothing else, it enables you to declare victory: “We’ve turned things around and we’re hiring again.” By contrast, multiple cuts are terrible for the morale of the employees who have not been laid off.

Move fast.One hour after your management team discusses the need to layoff employees, the entire company will know that something is happening. If you think you need to layoff people, then do so because it’s unlikely that a miracle will happen. Once people “know” a layoff is coming, productivity drops like a rock. You’re either laying people off or you’re not—you should avoid the state of “considering” a layoff.

Clean house.Painful as it may be, a layoff is a good time to terminate marginal employees. It’s good for the company because it can take care of many personnel issues at once without having to differentiate between people who aren’t performing and positions that you’re eliminating. It’s good for the marginal employee because he’s not tainted with getting fired. Finally, it’s good for the employees who remain because they can see that you have a clue about who’s performing and who isn’t—assuming you’re not clueless in making decisions.

Whack “Freddy.”Most executive have hired a friend, a friend of a friend, or a relative as a favor. When a layoff happens, all the employees will be looking to see what happens to “Freddy.” “Did he survive the cut or did he go? Is it cronyism or competence that counts at the company?” It should be true that Fred is dead.

Share the pain.When people around you are losing their jobs, you can share the pain too. Take a smaller office. Turn in the company car. Reassign your personal assistant to a revenue generating position. Fly coach. Stay in motels. Sell the box tickets to the ball game. Give your thirty-inch, flat-panel display to a programmer who could use it to debug faster. Do something, however symbolic.

Show consistency.I cannot understand how companies can claim that they have to cut costs and then provide severance packages of six months to a year of salary. You would think that if they wanted to conserve cash, they’d give tiny severance packages. Typically, there are three lines of reasoning for generous severance packages:

• Cutting headcount, even with severance packages, is cheaper than keeping the employee around indefinitely, and we don’t want any lawsuits.

• We have lots of cash, so our balance sheet is strong, but we need to cut heads to make our profit and loss statement look better.

• Wall Street (or your investors) is expecting dramatic actions, so we need to do this to show the analysts that we’ve got what it takes to be a leader.

None of these reasons makes sense to me. If you need to do a layoff to cut costs (and conserve cash), then provide minimal severance packages, cut costs as much as you can, conserve as much cash as you can. If nothing else, it’s a consistent story.

Don’t ask for pity.Sometimes managers go to great lengths to show the person they’re laying off (or firing) how hard it is on them. This reminds me of the old definition ofchutzpah: a boy murders his parents and then asks the court for leniency because he’s an orphan. The person who suffers is the one being terminated, not the manager.

Provide support.The odds are the people getting laid off aren’t “at fault.” More likely, it was the fault of top management—the same top management with golden parachutes. Hence, you have a moral obligation to provide services like job counseling, resume writing assistance, and job search help. There are firms that specialize in helping employees during “transitions,” so use them.

Don’t let people self select.We had a joke at Apple during the dark days of the late eighties that went like this: We should announce that employees who want to quit should come to a big meeting. Those who wanted to stay at the company should not attend. Then we would let the people go who didn’t attend the meeting and keep the ones who wanted to quit—because they were smart enough to know that we were in bad shape or that they had better opportunities elsewhere.

The point is that if you let people choose to get laid off or retire, you might lose your best people. Deciding who to layoff should be a proactive decision: Select the go-forward team to ensure that you never have to lay people off again. You should not leave this to chance.

Show people the door.With few exceptions, all you should do is let people finish the day—maybe the week. (My theory is that Friday is the best day to do a layoff because it lets people have a weekend to decompress.) Showing people the door seems inhumane, but it’s better for both the people leaving and the people remaining.

Move forward.Let people say goodbye and then get going. This is when leadership counts because any yoyo can run the show in good times. It’s bad times when you separate the men from the boys and the women from the girls.

After the layoff, this is what the remaining employees will be wondering about:

• Guilt: “Why did I survive the cut and my colleagues didn’t?”

• Future of my job: “Will I survive the next round of cuts if there are more cuts?”

• Future of the company: “Will the company survive at all?”

So you need to set, or re-emphasize, goals, explain what everyone needs to do to get there, and get going because the best way to move beyond a layoff is to get back to work.

Circulate with the troops.You might want to retreat to your office, turn off the phones, stop answering emails, and avoid everyone. This would be the worst actions to take. This is the time for you to motivate by walking around. Employees need to see you, talk to you, and seek your help and advice. They don’t want to think their leader is cowering in some foxhole. The brave face that you put on may be a charade, but it’s an important charade.

How to avoid being an IT layoff casualty?

f you’re an IT worker, follow these steps now to avoid becoming a layoff statistic:

1. Assess your project’s business value. If the project adds substantial value to the company, you may be safe. Projects established with solid ROI, and rooted in reasonable assumptions about business requirements, are the best. Unfortunately, many projects are expensive, wasteful boondoggles that shouldn’t ever be funded. If you’re employed on one of these, then escape immediately!
2. Examine the project’s execution success. Even the best-laid plans go awry, and IT projects are no exception; in other words, even a great business case can’t compensate for lousy project delivery. If gridlock, sideways motion, and long delays characterize your project, then you’ve got to decide whether these problem are a temporary setback or a permanent state of affairs. If the latter, then get out now.
3. Evaluate yourself. Having looked at the project, look even more closely in the mirror. Does the team recognize your accomplishments and think you’re doing a great job? When it comes to personal performance in tough economic times, being merely good is just not sufficient. Yeah, I know it sucks to work all those hours and then put in more study time at home, but getting canned in a recession is worse. Trust me, I’ve been there: I was laid off as a young IT guy in the aftermath of Black Monday in 1987. It wasn’t fun.
4. Stay put or run like Hell. Based on honest analysis, decide your personal path forward. If your project is strategic and the team is executing reasonably well, then you may be okay. On the other hand, if signs point to toward project disaster, then perhaps you’d better get out. Use whatever time might be available to plan your next moves.

HCL sacked 450 employees at Delhi and bangalore....

IT services company HCL Technologies has asked 450 employees at its Delhi and Bangalore offices to leave. This is after the global downturn has impacted the revenues of clients of Indian IT companies, thereby dampening demand for software services.

According to online reports going around the company had sacked 400 people in Delhi and another 50 in Bangalore in the last one-two months. The firm had earlier asked those on the bench, the buffer of employees kept on the rolls for new projects, to get assigned to projects or face the prospect of being asked to leave the firm, he said.

The company made usual performance statement officially - “HCL follows a systematic process of performance review and development, and the expectation of the organisation is for employees to meet the stringent performance standards. This is a routine and ongoing process,”

It may be noted that HCL has about 52,957 employees. Layoffs at other cities where HCL has offices like Chennai be may on cards next?

Infosys Layoff - The IT giant Infosys Technologies fires 2100 employees - lays off fears confirmed

The fear of layoff at Infosys is finally confirmed! Infosys Technologies the blue eyed company of Indian corporate community has finally shown the boot to 2,100 of its employees across the country.

Reportadly they indicated that they have done this after an annual performance appraisal exercise concluded mid-March. This is said by none other than Mohandas Pai, head of the company’s HR, that based on the performance, 2,100 employees had left (or asked to leave?) Infosys. The company had a total headcount of 1,03,078.

“The tolerance for non-performance has come down to zero,” Mohandas Pai, HR Head Infosys

• Appraisal conducted for 60,000 employees
• Bottom 3.5% of the people were either outplaced (soft jargon for laid off) or left
• Normally the bottom size is 5%
• Trainees (about 45,000) were not part of this exercise.

What needs to be seen is that taking clue from the leader - whether other IT companies in India will follow the suite?