Indian IT and ITeS have a breather as rupee bleeds

IT and ITeS companies make money in US dollars and pay their employees in Indian currency

News | by Muntazir Abbas

 NEW DELHI, INDIA: The IT exports and business offshoring industry has a steady association with the US dollar, and it's no secret either. The US business contribution to the country's robust industry stands at more than 60 per cent. As the tumbling rupee breached $60 mark on Monday, the sector is bound to thrive in the economic cataclysm.

The rupee depreciation comes as a breather for India's IT and ITeS that contribute over 7 per cent to the country's GDP. The industry, though, believes that it would give short-lived respite, as majority of contracts are negotiated at rupee value, and run for a longer term.

NASSCOM president Som Mittal, in a statement to CIOL, instead believes that the absolute rate was not a concern for the industry as the volatility continues. "Such sudden fluctuations impact the planning process for companies and customers. We hope to see the rupee stabilizes for better planning and decision making for IT-BPM industry," he said.

"In the past few days, the Indian currency has stirred policymakers as it plunges to an unprecedented low level," Mittal said. NASSCOM, however, feels that their fundamentals of businesses are strong, and the Indian IT Industry would pass through the current situation of currency volatility and continue to grow.

IT and ITeS companies, as a part of strategic business, make money in US dollars for leveraging services on Indian soil, while they pay back to their employees in Indian currency. Similarly, software exporters too, rake in currency at a time when rupee weakens.

These firms are predominantly located in the national capital's satellite towns of Noida and Gurgaon, in addition to Bangalore, Mumbai, Hyderabad and Chennai.