Sunday, February 10, 2008
The cut-off US$ Indian Rupee Value when IT Offshoring becomes non-lucrative
Indian Rupee has been rising against US Dollar. For last 5 years it has changed from INR 48 per USD to around INR 39 per USD. (See the Yahoo Chart above- For current value go to Yahoo finance
The question to ask is what is the cut-off when the Indian IT offshoring story becomes less lucrative or in fact reduces to normal business (5% profit margins)?
Couple the reducing $ with increasing salaries of Indian IT companies - we need to get this number (the Cut-off INR-USD Rate) right. I call it the COOT (Currency Offshore-Outsourcing Threshold). In my opinion, COOT for 2008 is 30 (1 USD = 30 INR)