The Indian currency, the rupee, has recovered slightly over the past one week after a sharp fall in early October. The rupee hit a lifetime low of 74.23 per US dollar before recovering to 73 levels.
The rupee’s depreciation is often seen as a boon by the country’s IT services firms with a large clientele in the United States. One conservative estimate claims that 1% decrease in the value of rupee against the dollar will lead to a 1% or 1.5% rise in the earnings of IT companies.
However, the fall comes at a time the country’s IT services industry is transitioning from labor-intensive work to more sophisticated new technology services. In addition, tightening visa rules in the United States and a broader slowdown in technology spending are hurting their balance sheets.
The profits earned from the weak currency will pay salaries to US-based employees, reports Nikkei Asia Review, citing Madhu Babu, a research analyst at Indian brokerage Prabhudas Lilladher.
Indian firms are also investing heavily in developing new technology solutions and upskilling their employees.
Last year, the country’s seven IT companies had to lay off more than 56,000 employees as automation and artificial intelligence left several job functions rudimentary, according to Mint, India’s financial daily.
These days, recruitment has also slowed down in the industry. The IT industry added just 11,600 employees during 2017-18, compared to 93,500 a year ago, according to credit rating agency ICRA.