Yesterday, I reblogged a Reuters‘ article entitled “Indian rupee sags to record low despite government steps“.
Traditionally, when currencies fall the cost of imports rises but it becomes easier for exporters to World markets. In recent years, one of India’s biggest growth industries has been the outsourcing industry. Outsourcing basically sell services overseas, so it’s an export; so Indian outsourcing will benefit from the lower Rupee?
India’s outsourcing industry has run into difficulties in recent years. Costs have risen on the back of inflation and World markets have continued to question service levels, so there has been a trend from offshoring to the likes of India to nearshoring or indeed reshoring services back to developed countries. Also China has been going head-to-head with India to secure a share of the global outsourcing market and China could well be the eventual winner.
So is the lower Rupee good for Indian outsourcing?
The answer is probably not. Contracts are for long time periods, possibly priced in US Dollars and may well preclude foreign buyers from benefiting from the lower Rupee rate; so this will cause buyers to question further the effective offering of the Indian outsourcing sector focusing on the negatives.
Let me turn this to an open question:
Will Indian outsourced service providers benefit from the lower Rupee?
- Indian rupee dives to record low against dollar (thisismoney.co.uk)
- Indian rupee sags to record low despite government steps | Reuters (dralfoldman.com)
- Rupee plunges to lifetime low‚ past Rs 100 per USD (thehimalayantimes.com)
- Indian Rupee Collapses – Worst Day In 20 Years (zerohedge.com)
- The volatile journey of Indian rupee since independence (news.in.msn.com)
- Indian rupee falls to new low on Monday (thebricspost.com)
- Rupee hits record low against dollar (bbc.co.uk)
- Indian rupee dives to record low against dollar (dailymail.co.uk)
- Rupee hits 63.77 against dollar to fresh record low (profit.ndtv.com)
- Falling rupee has little impact on Indian tourists (dnaindia.com)