India’s economic growth, even before coronavirus hit, looked shaky and undoubtedly slowing.
Since demonetization and GST, Indian economy has continued to slow down year after year, for several years. While we hoped for a recovery, and going back to a high rate of growth as we were used to for the last 20 years, that hope seems all but dashed now.
Out of all major economies of the world, India is seeing the worst recession.
Some economists have been arguing that while India will definitely bounce back from this deep recession, we need to get used to moderate growth rates of 3-4% a year given that the government is signalling that it prefers a close economy instead of an open and global one.
Here are a few things that are happening:
- There is widespread destruction of private capital. Private investments will be hard to bring back.
- Foreign capital will not find India as attractive if the government pursues a closed economy (“atmanirbhar bharat”) policy. There would be some high growth sectors and businesses that will continue to attract foreign capital.
- We will see tons of bankruptcies as the moratorium on insolvency proceedings through IBC is lifted.
- In order to survive and benefit from government handouts, SMEs and businesses will remain subscale.
- We are likely to see higher taxes soon as the central government is struggling to pay GST tax deficits to states.
- Job growth in India will be poor. The brightest of Indian talent will have to start looking for jobs abroad once again.
- 15 million Indians are expected to be sent back to poverty.
- Unprecedented number of young people are reaching working age at a time when job growth is slowest and jobs are in fact disappearing. This would influence politics in India in unpredictable ways.
- Big companies with liquidity will consolidate and create sectoral monopolies while many competitors with a lot of debt on their balance sheets will shut down or get acquired.
- It would be increasingly interesting for Indian businesses to service international markets rather than focusing on a slow domestic market. If you are in the service business, thanks to remote work culture you can serve a large international market from India. Outsourcing is likely to boom in the years ahead.
Is there any way we can go back to the earlier rates of fast growth that we enjoyed for decades?
- The job of the government is clearly cut out. Fast reforms and hard work to attract foreign capital. Aggressive reforms may attract foreign investors at a time like this. There is enough capital in the world, but we need to show it will be a safe bet to invest in India, hassle free to do business here and that we are serious about economic reforms and growth. It may be politically difficult to do a lot of reforms in a time like this, but it will be more disastrous to not do anything.
- Major areas of reform: labour laws, lower taxes, making land easily available for industries and investors, faster and cheaper dispute resolution process, allowing foreign law firms to practice transactional law in India (it’s a long standing demand of foreign investors), providing more staff and resources to courts and allowing expeditious online dispute resolution, easier permissions and licenses for building new projects, real estate and infrastructure development.
- We need a massive cut down on corruption which acts as additional tax and turns away many conscientious foreign investors. Also, India has developed a reputation for crony capitalism, and the government needs to show it is fair to all businesses and investors and will not favour one over another.
- The government has to disinvest aggressively and use the money it generates from selling assets to kickstart an investment cycle through massive government spending on education and public infrastructure.
Of course, the opposite approach is that of what India did till the 1990s, for the longest time since independence. We chose to keep our economy closed (another word is self-reliant) and lived with slow or moderate growth, a lot of poverty, a terrible job market. We may soon be doing this again.
What can we do as individuals?
One option is to leave India and work for economies that have the economic advantage.
The 70s, 80s and even a large part of 90s were marked by brain drain, as well-educated, smart Indians left India for greener pastures in advanced economies. This strategy worked for them.
Indian graduates used to be desperate to get out of the country somehow, but that changed later as Indian economy has been booming. Finding opportunities for growth at home has been easy.
If we see economic growth slowing significantly, we will see our top engineers, startup founders and scientists leave India for other countries once more. We can call it Brain Drain 2.0.
So yes, it is not a terrible time to think of taking your career international or go for that masters degree abroad. However, you may want to wait till the economy and job market begins to recover in your target country. In fact, you should decide which country you want to pursue your masters degree in based on how well they recover from the pandemic and recession caused by it. For instance, today South Korea and Japan look like far better places to go for higher education and consequently finding a job there, as opposed to the UK, which is reeling from a recession that is only slightly better than that of India.
Remote work revolution and reskilling
The other thing we can do, which is perhaps much better in fact, is to take advantage of the remote work culture and find foreign jobs that we can do from India. This is already happening at a massive scale when it comes to technology. There is absolutely no job market slowdown for techies today as a huge number of large foreign companies are either setting up development centres in India or hiring Indian employees as remote workers. For instance, Walmart’s US delivery technology process is being managed by over 7000 Indian engineers sitting in Bangalore!
Not all companies are large enough to set up captive development centres in India, but they don’t have to either. They are now quite used to hiring and managing remote workers, which means they are happy to hire workers in India directly, without involving any third party outsourcing agency even!
Indian workers are cost effective for developing countries to hire remotely, and will drive down their personnel costs in a big way. However, we will be competing with other countries with English speaking capabilities and low wages such as Philippines, Bangladesh, South Africa, West Indies and Vietnam.
This means there will be tons of freelancing and remote work opportunities across the world that we can pick up on, as long as we learn languages and have the skills that are in high demand.
Even outside technology, there will be big demand for such remote workers in digital marketing, sales, design, writing and editing, accounting, management consultancy, telemedicine, architecture and even law.
This is the other kind of brain drain, where the skilled workers do not even have to migrate out of the country but they work for foreign enterprises while Indian businesses starve of talent and find it hard to hire or retain top talent.
With respect to legal work, there would be less traditional work, which is what most lawyers are accustomed to. Instead, there will be specialised litigation such as NCLT, competition law, etc. that will see big growth due to market conditions. We have written about the kind of legal work that we expect to increase in the months and years ahead over here. Beyond that, a large number of lawyers will have to reskill themselves to participate in the global legal market, assisting lawyers and SMEs from other countries in a remote work mode, failing which many lawyers will be reduced to poverty.
Language learning will be critical as well. Learning to speak and write good English will become very important to participate in this global remote workforce. It would make a great deal of sense to learn languages like Chinese, Japanese, Korean, German, French (France, Belgium, Switzerland and much of Africa), Portuguese (Brazil), Espanol (Spain and Latin America), Hebrew and Russian.
What should be done by businesses and law firms?
Irrespective of which way the economic wind blows, some businesses and law firms will continue to do well because of their focus and strategy. Here are some of the big market beating strategies one could pursue.
Specialise in areas where domestic demand is predictable
It is quite obvious that lawyers specialising in banking and finance laws as well as insolvency will be quite busy. Many of them are already very busy with restructuring of loans and advisory work, and later they will be busy with recovery, bankruptcy and insolvency proceedings.
Same for arbitration lawyers, once all the breached contracts are dragged to arbitration over the next 2.5 years (limitation period being 3 years).
Because of increasing consolidation and anti-competitive trends, I expect competition lawyers to remain very busy. Similarly, tax litigation is likely to pick up as the government pushes the taxman for more revenues.
There are bright spots in transactional law practice too, with specific sectors seeing a boom. Technology and media is likely to stay strong and continue to generate a lot of work for lawyers, as will real estate litigation though for entirely different reasons.
Government projects would also be a growth driver for law firms going forward.
We have written a lot about what we expect to do well, and hence I would stop here and just provide you some links:
- 7 things you can do if you are struggling to get a job in the post-COVID economy;
- Rising to the occasion as we go deeper into a recession;
- What is third party funding and why it may become important for post-COVID disputes practice in India;
- How virtual hearings have turned the table in favor of younger litigators and exposed institutionalized inequality;
- How lawyers can be more productive using Parkinson’s Law.
Get very good at business development, lead generation, conversion, client support and retention
A rising tide lifts all boats, so it has been easy for all businesses and law firms to do relatively well when the market was expanding. The reality is quite different now. Businesses with strong competitive advantages and differentiated services or products will do well now, while the rest will suffer a massive blow.
Law firms that do not have strong client pipelines, proven strategy for business development and lead generation, do not have good processes and defined practices to turn leads into paying clients, do not have strong client support processes or simply fail to retain older clients and get more referrals from them, are already feeling the pinch.
The only way to survive in times like these will be to develop strong lead generation and conversion practices, apart from efficient client support and retention strategy.
If you have not spent a lot of time thinking about and working on these things, it is high time you change that.
Create a strong professional culture in order to retain top talent
The only way to grow an organisation is to attract and retain top talent. This is only possible if you create a professional, objective, fair, rewarding and exciting work environment that people would like to be a part of.
Law firms like JSA, Induslaw and Trilegal have shown that professional law firms tend to grow much faster than family run or individual centric fiefdoms.
If you want to beat the brain drain, this looks like an inevitable choice.
Leverage global cost arbitrage and focus on prosperous international markets
Many emerging businesses will leverage the unprecedented global arbitrage opportunity that has opened up due to remote work going mainstream.
The legal industry has not seen much outsourcing except for by some very large companies and law firms. There is now a renewed interest and massive incentive to explore legal outsourcing models once more, although the older models are less likely to work this time.
We are more likely to see the rise of freelancing platforms, businesses that focus on SMEs in advanced economies or alternatively, tech-driven legal services that rely on cost effectiveness to lure end-users.
Countries like the UK and USA already have laws in place to support such initiatives and Indian lawyers, just like Indian techies, are in a great place to lead a digital legal outsourcing revolution.
Which companies will lead the way in the future, like Infosys or TCS did for the IT outsourcing industry?
Lobby for a more open Indian market and push for reforms of the legal sector
Indian lawyers and law firms really need reforms to get out of this economic mess with as little pain as possible. We need new phenomenons like class action, third party funding, online dispute resolution, online filing across courts for higher productivity, waves of investment and increase in the volume of work.
Failing this, prospects for the growth of the legal sector look quite bleak as major clients are struggling and would be really penny-pinching when it comes to footing legal bills.
Would our legal community and especially young lawyers be smart enough to read the writing on the wall?
How can Lawsikho help me to prepare for the challenges ahead?
The challenges of the current economic climate require lawyers to focus on a very new kind of legal work as compared to the traditional areas of law practice. Specialization in a lot of new practice areas will be critical for success in this economy.
Simultaneously, a lot more effort needs to be put in on legal practice development as well, alongside acquisition of skills.
We have built an array of courses that will help you to reskill and upskill so you can make the best of a very difficult situation.
- If you are interested in corporate governance, you should check out the diploma in Companies Act, Corporate Governance and SEBI Regulations;
- If you want to get that in-house counsel job, go check out the diploma in Business Laws for In-House Counsels;
- If Industrial and Labour Laws interest you, go take a look at that diploma course;
- The Intellectual Property, Media and Entertainment Laws will be booming in the coming times, if you’re inclined towards that career, check out that diploma course;
- If you’re sure that your niche lies in M&A, Institutional Finance and Investment Laws (PE & VC transactions), go check out that course;
- The Cyber Law, Fintech Regulations and Technology Contracts is in dire need of good young talent if that is what ticks for you, go check out that course; and
- Every young lawyer should check out our diploma course in Advanced Contract Drafting, Negotiation and Dispute Resolution.
Check out our other executive courses which can be helpful:
- We have a certificate course in Advance Corporate Taxation;
- You can also check out this course for Insolvency and Bankruptcy Code;
- If Trademark, Licensing; Prosecution and Litigation interest you, we have a course for that;
- LawSikho also teaches Competition Law, Practice and Enforcement in a course;
- Technology Contracts will be essential to every business in the future, you can check out that certificate course; and
- Knowledge about Banking & Finance Practice: Contracts, Disputes & Recovery is essential for every BigLaw layer, you can check that out too.
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