New Delhi: As the global financial crisis forces companies to cut cost, public relations firms are facing the heat as business houses are going slow on image building and advertisement campaigns.
According to Assocham, the Indian PR industry, which till some time ago was witnessing a massive growth rate of more than 30%, is struggling to retain clients.
“As against the normal 25-30% growth rate the industry has been experiencing over the past five years, growth this year may be 10-15%,” says Adfactors Public Relation Managing Director Madan Bahal.
“The Indian PR industry is an integral part of the larger business landscape. Anything that impacts global or Indian business will indirectly impact the industry here,” he says.
Industry sources say that PR companies are working hard to renegotiate terms with clients, who are, at least for now, finding it difficult to spend hefty amounts on public relations.
“Cost reduction is a natural pursuit for all corporates under these circumstances and expenditure on marketing-related activities would be no exception,” says Shrishti Communication Managing Director Ashish Datta.
“As far as it is manageable and affordable, we are not against giving some relaxation to the suffering business houses,” a top executive in the industry said, adding that the industry is ready to help out their clients of the trouble.
Integral PR CEO Sharif Rangnekar said: “It is a bit early to say whether the industry is hit. But certainly there is a concern about the foreign clients and the clients who are operating on the international level.”
Integral PR CEO says that there is a strong likelihood that various companies, which are still assessing the impact of financial crisis on them, might renegotiate their terms with their respective PR partners, adding: “This is an industry which grows with the economy.It’s very natural to have an adverse impact when global economy is not in a good state”.
But at the same time, he also sees a new opportunity for the industry. “It is testing time as well as an opportunity for the industry to come up with innovative ideas and new plans to reinstate the image of their clients in a weak market,” he said.
The PR industry, in a bid to slash its operating cost, is also resorting to cost-cutting measures in its own way.
“I haven’t been given the appraisal despite having got verbal assurances,” a PR executive in a top PR firm said.
On condition of anonymity, she said that the company has suddenly withheld all promotions, as it has lost around 10% of its clients.
According to sources, since the sectors mainly affected by the economic crisis are banking and financial services, Technology, Reality and Infrastructure, the PR firms dealing with Healthcare, FMCG, Education etc are happy even at this time, as their growth remains unaffected.
The industry has attracted a number of International PR agencies over the last decade to start their operations in India, thanks to the high growth rate and tremendous potential of the industry in the country.
According to ASSOCHAM figures, the estimated size of Indian PR industry is $3 billion.
Accoeding to sources, the already high attrition rate, at around 40% in the industry, is also expected to go up further on account of the job dissatisfaction amidst its employees.