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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)
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