The effect of falling dollar on Indian Outsourcing Firms

Recently the rates of US dollar have fallen about 15-20%, which has lead to a huge decrease of Export from India.

The rates of dollar had reach 46 to 47Rs (INR) but this year it has fallen about 12-15% and reached 39 to 40Rs (INR). This had a great impact on Indian Exporters.

There were only two options left with the Indian firms, either increase their rates by 12-15% or bear the loss of 12-15% in their profits.

If we look at the first option, i.e. to increase the rates, it would be difficult due to the competition in the international market. And for the second option it would be much more difficult, as to bear a loss of 12-15% in profits, is not possible. Many of the firms have their in profit range in between 25 to 50%, but the firms which are in a competitive market have much less profit range than this. For the firms with high profit range it may be possible to survive but for the firms with a less profit range it is like impossible to survive the competition. Due to this there is a great decrease in export as compared to last year. The effect of this is more on small firms than on big giants. Now, this is quite interesting, Indian IT giants says that will have a effect on their business due to the falling of the dollar, but not much. While the companies in other sector are facing too much problem, as well as small IT companies.

Note: This blog is for information purpose, all figures are approximate.

Device Developer