The falling rupee could make a difference in the IT and IT-enabled services with the revenue from exports in the sector poised for a jump. Though the software exports from Kerala are much less in comparison to the neighbours, the current scenario is promising for the State too.
Kerala's IT exports crossed Rs.1 billion in the last fiscal and would grow by 50 per cent this fiscal, according to the projections of National Association of Software and Services Companies (Nasscom). Kerala has more than 500 IT companies employing over 80,000 people and larger companies are keen on starting operation in Kerala.
The depreciation of the rupee could be a gainful opportunity for the IT sector in the short term, But whether the situation would prevail in the long term remained to be seen, said Gigo Joseph, former head of Infopark and CEO of Smart City.
“It is advantage to software-exporting companies. As far as the contracts are signed in dollar terms, the IT sector will benefit from the current scenario. Companies that signed contracts pertaining to the period of considerable depreciation of the rupee in the 55-65 range, had already made some gains,” said KMC Nair, General Manager (IT), Muthoot Systems and Technologies Private Limited.
What would happen if the rupee continues at a lower value over a longer period? Then there is the possibility of the overseas clients insisting on redrafting the deal. They could demand better rates in the long term, he says.
Nasscom has launched its regional council in Kerala, sensing the growth potential of IT and IT-enabled services in the State. While other States have utilised their potential to a large extent, Kerala has much more to harness in the IT sector. Innovation, high rate of literacy and connectivity are the factors for the State’s growth in the sector.