Friday’s diesel price hike has come as a shocker to the IT industry, a major consumer of the fuel, at a time when it is facing challenges on various fronts.

The increase, from Rs. 43.91 to Rs. 49.98 per litre, is expected to force companies to re-look their administrative costs. Regional director of NASSCOM, K. Purushothaman, says the hike would have a huge impact on companies’ transportation and power generation costs.

In view of 24/7 operations, captive power generation and providing transportation to employees are a necessity for IT companies. Vehicle operators are expected to charge more in the wake of diesel price increase, he says.

The transportation cost could be higher, at an estimated Rs. 98 per employee per month. Transportation partners’ agreements have built-in escalation costs based on diesel price.

The impact will vary based on the number of employees who are provided company-paid transportation, the nature of work, and distance between office premises and place of stay of employees, he says.

As far as power costs are concerned, the effect will vary across States depending on the power situation and the extent to which diesel gensets are used in IT companies.

In Tamil Nadu, where the power situation has improved substantially in the past few months, the cost to an IT company would roughly stand at an additional Rs. 50 per employee per month, Mr. Purushothaman says.

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