Is The Fall Of Rupee Good For Indian BPO Companies?

Indian Rupee continued to fall for another week and is now trading at around 52.73 per dollar.Various economists have expressed their concerns over this fall and want the government and RBI to

take some serious actions. However, there is speculation that outsourcing and exporting companies are registering increased profits due to this decrease in value of rupee. Notably, rupee is not just

weak against the United States Dollar and it is also falling against other currencies like Pound and Euro over the last thirty days. So what is the true story behind this? Are BPO companies really happy

with this fall? Let’s find out.

Actually, to an extent the rupee fall has benefited the BPO companies as the clients are paying in their home currencies so the companies here in India are receiving more money because of the difference. However, some of the giants are not happy with this fall. Infosys has already said that rupee fall may be beneficial in small run but it will harm the economy on the larger scene. The

historic fall in the value of rupee may seem to have a positive effect on operative margins, but it hampers the overall growth of the economy. Economists have also said that the volatility in Indian market can even force clients to look for other outsourcing destinations in future. Actually, the

gain from currency slide is not very big as the economy will suffer which is already on a slow down.Inflation due to this will increase and prices for travel, power and general capex will surely shoot up canceling the momentary gains.

Indian Rupee was trading at around 47.5 against the dollar in last quarter and since then it has fallen subsequently without any solid support. The depreciation of over 7 percent in the value of any currency has negative effects on the economy of a country and if the rupee continues to fall

thenBPO companies will also have to face the consequences of the same.. However, nobody knows how long it would take for the rupee to bounce back and economists can only hope for the best.

Another worry for the BPO sector is that clients understand and analyse the fall of currency in the country where they outsource and if the fall is really high, they sometimes even ask to accommodate the rates. Obviously it wouldn’t take too long for western clients to realize the change. Moreover,

the wage bill may also increase for companies and when the rupee value increases the wages won’t go down. Parochially, some BPO companies can say that this is a golden period for them but in the larger picture they will feel the heat. Hence rupee fall is not god for any industry and if it keeps sliding then the BPO sector will have to prepare for a tough time. The concerns over global

slowdown and anti-globalization movement can combine with this fall in rupee and hit the Indian economy very hard by slowing down the growth rate for many years.

India in a highly volatile session

India in a highly volatile session because of fresh selling by funds and retail investors, Indian equities edged down further on Friday.

Fears of an interest rate hike due to rising inflation dampened the domestic sentiment.

At 2.01 pm, the 30-share BSE index, which lost nearly 352 points in the previous two sessions, fell further by 147 points, or 0.91 per cent, to 15,999. Similarly, the wide-based National Stock Exchange Nifty index shed 49 points, or 1.02 per cent, to 4,790.

The IT and Auto indices on the BSE gained 0.18 per cent each. While Realty, Metal, and Power were trading down by 2.16 per cent.

Market experts said the trading sentiment was weak as participants anticipated another hike in key short-term interest rates by the Reserve Bank of India to rein in inflation, which inched closer to double digits at 9.80 per cent for the week ended August 13, up from 9.03 per cent in the previous week.

A weakening trend on other Asian bourses following overnight losses on Wall Street also cast a shadow over the domestic market, they said.

In the Asian region, Hong Kong's Hang Seng Index was down by 0.43 per cent, while Japan's Nikkei Index shed 0.07 per cent in morning trade today. In the US, the Dow Jones Industrial Average fell by 1.51 per cent in Thursday's session.

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