Rupee appreciation will impact IT earnings

Bangalore, Jun 26: Come July, the impact of hardening of the Rupee, which has put Dollar-earning IT and BPO companies under pressure, will felt on the first quarter results, MindTree Consulting President and CEO (IT Services) Krishnakumar Natarajan said today.

Speaking to newsmen after the announcing the US-based CIT Group's global sourcing initiative with MindTree here, he said the IT and BPO sectors would start feeling the pinch and currency-swapping or hedging would remain a short term measure.

"IT companies cannot fully depend on hedging or dollar-swapping with other world currency, as there are disadvantages attached with it. The payment of the fee while the companies hedge is the problem and in case Dollar appreciates companies stand to lose on the currency and pay the fee as well," he said.

He said MindTree had hedged about 50 per cent of expected dollar revenue, but still take it as a short term measures.

The IT companies spent on expenses in Rupees and appreciation of the currency would hit them hard. "Their customers are not bothered as they only look at the cheaper options to get their work executed.

This will have its effect on the Indian IT companies," he said.

He termed as mere speculation that Dollar would fall under Rs 35-mark, as reported by the media quoting some industry leaders.

"This is not possible. I feel it (Dollar) will stay in the range of Rs 40-41 for some time to come."

UNI