The Indian IT industry, which gets 50–60% of its income from the US market, is benefiting from the rupee’s recent weakening versus the dollar. The rupee has lost almost 108 paise against the dollar thus far in the third quarter. According to analysts, this will increase the margins of IT companies by 30 to 50 basis points.
Competitive pricing pressures are also posed by a more severe decrease in other international currencies, such as the Mexican peso, Japanese yen, and Chinese yuan. In contrast to the Brazilian real’s 27% collapse, the Mexican peso’s 19% decline, and the rupee’s 12% decline against the dollar this year.
Although there are short-term benefits to a weaker rupee, analysts warn that there would be little long-term effect on competitiveness. Elements including cost structures and worldwide currency fluctuations will impact the sustainability of profits.
A favorable exchange rate and consistent demand for digital transformation initiatives, however, bode well for the Indian IT industry. Because different companies have different hedging plans, margin profiles, and exposure to overseas sales, the net benefit of the rupee’s drop differs even though it is good for revenues and profits.
Accenture, a company listed on the Nasdaq, increased its prediction for fiscal 2025 annual revenue growth from 3-6% to 4-7%, further bolstering the sector’s optimism. The shift is due to a smaller foreign exchange impact on its US dollar performance, which is now anticipated to be -0.5% rather than earlier.
