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Coping with the challenge of demographic trends
Indian
companies must study America’s demographic profile in greater detail to cater
more effectively to the changing US market, writes Mohan Babu
Two most common
topics close to most Americans are — the economy and the weather, not
necessarily in the same order. During the past week, an array of gloomy economic
and financial data came out, sufficient to send a chill down every economist’s
heart. Data ranging from the rise in US unemployment from 4.9% in September to
5.4 % for October brought home the looming recession. These and other economic
factors are going to have a ripple effect across the country (and the world),
and the US government acutely aware of the consequences, has requisitioned the
services of some of the best economists and wizards. However, most economists
also realize that economic conditions are relatively “short term” and there are
various other factors that are going to play a role in the long term, one of
them being the demographics of the nation. There is an increasing mention of the
change in demographic profile of the country in the media and elsewhere and I
thought I’d research it a bit and was surprised by the findings.
There are a few
distinct demographic generations in the US. The first being the “Silent
Generation”, consisting of those born between 1925 and 1942. They are hard
working, economically conscience, and trusting of the government. They were very
optimistic about the future and held a strong set of moral obligations.
The generation
most talked about is the “Baby Boom” generation, generally consisting of those
born between 1945 and 1960. Boomers have a strong set of ideals and traditions,
and are very family-oriented. They are fearful of the future and politically
conservative. Boomers have shaped the current economy and financial markets to
no small degree. Currently, they are in the segment of the life cycle
characterised by having enough wealth or income to purchase items other than
houses and cars. This wealth, often in the form of professionally managed
retirement accounts, mutual funds, and pension funds, results in a huge infusion
of funds into the markets for stocks, bonds, and other financial investments.
The parents of the Baby Boomers are now reaching the latter stages of the life
cycle and are beginning to pass down accumulated savings to heirs in sizable
chunks. Billions and billions of dollars worth of wealth are inherited every
year.
Next comes the
Generation X (1961-1981) who live in the present, like to experiment, and expect
immediate results. By some accounts, they were the dominant force behind the
dotcom boom. GenXers are selfish and cynical, and depend a lot on their parents.
The future
generation Generation Y is already in the teens, currently age 14 and younger,
very materialistic, selfish, and disrespectful — but also very aware of the
world and very technologically literate. There are 70.4 million youths in the US
aged 5-22, comprising approximately 26% of the whole US population, which is
almost three times the size of Generation X ! Another interesting fact about
this generation is that this is the most ethnically diverse generation yet. One
in three is not white and nine out of 10 children under the age of 12 have
friends of different ethnicity than their own.
What does the
changing nature of American demographics mean to Indians and Indian companies?
Reading this far, you are probably wondering what all this means to you.
If you are a
young professional aspiring to come to the US, you need to compete with the
GenXers. You also need to prepare yourself for the influx of Generation Y
youngsters into the job market in the next few years. They are going to be
technically savvy and unlike the earlier generations, not hesitant to learn new
tools and technologies. In a nutshell, coming to the US will not be a walk in
the park. However, there will be a definite demand for people with certain
skills who can supplement the talents of local folks here.
For Indian
companies, a study of American demographics might unearth interesting facts.
They need to study the demographic profile in greater detail since it will help
them in catering to the demands of the changing American market. The market for
consumer goods is going to start booming; especially as the GenXers and
Generation Y folks hit the job market and build disposable incomes.
Interestingly, the aging baby boomers will require products and services to
cater to their tastes too. They are extremely wealthy and will not hesitate to
spend big bucks for quality products and services. Indian tourism industry take
note, baby boomers are going to travel to exotic destinations and if we can
provide them with the right kind of amenities. We need to generate some hype and
with proper PR and marketing, India could easily become the “go to” destination.
Most Americans,
believing in Keynesian maxim that in the long term we’re all dead, are focusing
on the short term, worried more about the immediate future, are concerned about
the stock market crash and current economic woes. Of course, there is a lot of
negative economic data in the horizon and an economy slipping into recession is
not going to be good. However, even a cursory glance at the next decade or so,
shows an interesting demographic shift, one which could lead to some interesting
opportunities. I can already see Indian entrepreneurs sizing opportunities in
the US, riding on the changing demographics. Any takers?
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