Weak rupee, emerging tech driving growth of IT industry

by Sharon Lobo    Jul 17, 2013

falling rupee

While most of us are grappling with the negative effects of the falling rupee, the same phenomenon seems to be working in favor of the IT industry. According to research agency India Ratings, the weak rupee will enable Indian IT companies grow in revenue as the effect of translation increases their ability to price better than global rivals. This not only provides a competitive edge to the sector but also increases its chances of winning new and renewal contracts.

For quite some time now, the IT industry, which earns around $100 billion a year from export of software and services, has been under tremendous pressure to sustain steady growth. And various factors such as inflation rise in salaries, high attrition, and investor expectations only added to their woes. The severity of the situation could be understood from the fact when N Narayan Murthy had to come out of retirement to head Infosys, after the company reported dismal results quarter on quarter.

It is not just the falling rupee that is cheering up the IT sector. According to a report by PricewaterhouseCoopers (PwC), emerging technologies such as social media, mobility, analytics and cloud are also boosting the revenue growth of the sector.

Emerging technologies such as social media, mobility, analytics and cloud (SMAC) are driving the growth in this segment and helping it move to the next level.
-Sanjay Dhawan, Leader - Technology, PwC India

Until recently, the Indian IT industry has primarily been known for its software services, however this is changing due to significant growth in the software products segment. This also can be confirmed with the growing number of software product companies, which have grown from 100 in the year 2000 to nearly 2,400 in 2013. Industry body Nasscom, estimates the revenue from the software product segment to grow from the current figure of $2.2 billion to $10 billion by 2020. 

While the IT industry can look forward to some exciting times, it however needs to tread the path with a certain amount of caution or else we will see more retirees rejoining to save what they started!