How do you see the depreciating rupee impacting the Indian IT industry
The level of volatility is a major concern for us. There could be a financial upside from the rupees depreciation for the IT industry, but we are also worried about the volatility of the currency. Now the rupee has depreciated against the US dollar, but a few days back it was appreciating marginally. Too much of volatility does not augur well for the sector.
Will the impact cut deep into the sector
This kind of volatility does not give any scope for the IT industry to make any kind of a planned move. The common perception is that the depreciating rupee helps the export-oriented industries, but any such benefits are very short-term oriented. At the same time, today the industry has also reached a size and maturity where it can handle such changes with various strategies.
Will customers now ask for price cuts
I do not think so. The sophisticated kind of customers who are well versed with outsourcing and offshoring realise that these are only short-term benefits. Further, some of the forex benefits gained by Indian IT companies are due to their hedging strategies. However, this could happen in some cases where the customers are not really mature about outsourcing and may ask for some benefits to be passed back to them.
Can the smaller IT firms manage this volatility
This largely depends on the size and exposure these smaller firms have on the forex front. Unlike in the past, these companies now have access to sophisticated forex strategies for a fee from firms specialising in this area. The bigger IT companies have been able to manage this with their own hedging strategies, forex desks, etc.