Crisis and Russian economy: road to accelerated recovery and growth

Briefly put, how would you characterize the current economic situation in Russia in general, and your industry in particular, given the unprecedentedness of  the impacts of the current crisis?

Clearly, the crisis has had major impact across the whole economy with the pre crisis boom being replaced by sluggish demand and highly competitive pricing. The situation has now stabilized but remains fragile. In our industry, the picture has been mixed. Our audit business remained relatively stable through the crisis, while

the demand for other services, especially those related to transactions declined, though we have now some increase in recent times. 

However, during the crisis, demand for certain countercyclical services, such as debt restructuring services, surged, and we remain busy in this area today. As it is always the case, some companies have fared better than the others in adapting and coping with the new economic environment. On the whole, however, I would say

that firms such as ours in the  professional services sector were not as hard hit as those in many other sectors. This is driven by the fact that the underlying need for assurance on figures and advice on business matters remains.

From the above assessment, how would you characterize the situation in your company today?

Overall, our business has continued to post growth, albeit at very modest levels, through the crisis. This is certainly a much better scenario than we expected in the winter of 2009. A crisis always brings a chance to have a look at your business, and we have worked hard to adapt and adjust. As a result, I believe we are coming out of the crisis in a good shape and are very confident about our company’s future.

Which anti-crisis measures adopted by your company enabled it to remain viable?

We took action in three key areas: Services – we worked quickly to understand the issues facing our clients and ensure that we are offering them what is needed today, not what they needed yesterday or may need tomorrow. This resulted in change in our portfolio of services with more on restructuring and related matters. People – as expected in such a market, the demand for certain services reduced sharply and quickly. In response to this, we reallocated a  number of staff between service lines to match the changes in demand, and also launched a program of ‘flexible working,’ whereby we asked certain staff to work fewer hours during the time of lower demand. Wherever possible, we were able to avoid redundancies.

"Companies that went into the crisis with strong client relationships, professional teams and were well managed operationally prior to the beginning of the meltdown are, generally speaking, all in a good shape today.”

Operations – we reviewed every aspect of our operations and were able to cut costs and drive efficiencies, as a result, we are now leaner and tighter operationally. As we come out of the crisis, our service offering will again change to reflect the changing conditions, and we have now discontinued our flexible working program

due to increasing demand for services.

Why do you think some companies are thriving today, while others are stressed to the limits, with some even contemplating bankruptcies?

Companies that went into the crisis with strong client relationships, strong teams and were well managed operationally are gener-ally all in reasonable shape today. However, when the tide goes out, you find out who has been swimming naked, as any weakness that was there before the crisis was exposed very quickly.

Looking at our sector though, I don’t think there are so many companies that are facing very serious problems

today.

"It is easy to be critical, but the crisis has been extreme and complex, and my sense is that the Russian government has so far done a good job handling the crisis."

How effective, in your opinion, has the Russian government been in tackling this crisis, and what measures still need to be taken not only to maximally minimize its negative impacts, but also to spur the local economy onto accelerated recovery?

The crisis has been extreme and complex and my sense is that the Russian government has done a good job. The crisis has shown the extent, to which the global economy is integrated, and as such, underscored the acute need for globally coordinated actions to address many of the acute issues and make sure that the lessons are learnt going forward. In this regard, the ability for the major economies to work together effectively will be critical.

And, finally, what is your prognosis on the prospects of full recovery of the Russian economy in general and your industry in particular?

We remain confident on the prospects for the Russian economy over the medium and long terms. As for the timing the recovery, I think that the underlying complexities of what is a very global problem make it hard to estimate with any reliability. As for our sector, we believe that as the Russian economy recovers, the demand for services of companies in our industry will also grow. However, we do not expect the super growth of the pre-crisis times, but we do expect Russia to be a good market for professional service firms going forward.