"Indian companies are running a risk by not giving attention to cost cutting."  Discuss the validity of this statement.

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Ashley Kannan eNotes educator| Certified Educator

I think that the statement is really quite valid.  For so long, in a business cycle sense, Indian companies had been experiencing unprecedented growth and economic expansion.  Cost- cutting was not seen as essential because growth projections would always "come to the rescue," being seen as almost guaranteed.  In the last two fiscal quarters though, this has not been the case.  The global economic slowdown, particularly in Europe with the Eurozone crisis, as well as a lack of political will in India to make the necessary financial adjustments to sustain growth for multiple businesses are all a part of the equation which has seen Indian growth slow to a crawl.  Indian companies thus run a grave risk in not seeking internal solutions to the economic slowdown.  Growth cannot be manufactured out of thin air.  The conditions have to enable it.  Right now, in India and in the world, the conditions are not favorable to business growth and expansion in the manner by which cost- cutting can be avoided.  For example, in the call center sector, the lack of expansion and growth has resulted in either massive cost- cutting schemes to be adopted or for organizations to close.  In this light, I think that Indian companies end up runing a very serious risk in not investing the time, energy, and will to embrace cost cutting measures that are intended to sustain economic viability.