STRONG RUPEE WILL DENT SOFTWARE EARNINGS: NASSCOM

Kiran Karnik, President of the National Association of Software & Service Companies, comments on the impact of a strengthening rupee on the software makers’ earnings. The industry earns nearly 70 percent of its revenue from the United States and a stronger rupee lower profit. Karnik spoke to reporters in New Delhi. “For every one percentage point rise in the rupee against the dollar you see a 30 to 40 basis points change in the overall profitability of companies. There will certainly be an impact on India's long-term competitiveness vis-à-vis other countries. “The long-term factors are fairly clear. Most economists agree that the rupee will appreciate because the economy is strengthening and the industry should take that into account. The problem is volatility. If you see a long-term increase of 1 percent points every year, the industry will manage.”

Courtesy -The Financial Express