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Falling rupee brings profits, challenges for small IT exporters

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The continuous and free fall of the against the US dollar has set the cash registers of India's small jingling, but on the flip side, this may also bring a plethora of challenges.

International clients are trying to persuade small software exporters to renegotiate contracts, expecting that the rupee will slide further.

According to Pratap Aggarwal, managing director and CEO of IDS InfoTech Limited, the expectations of overseas clients are increasing. "Cheap Indian software was a demand driver earlier, but now clients are looking for innovative skill-sets. An expertise in a technology or multiple technologies is now the pre-requisite to attract overseas buyers," he said.

Noting that Indian small and medium-sized software exporters need to change their business models and core competencies, Manish Bahl, vice-president and country manager, Forrester India (the Indian arm of global advisory firm Forrester Research Inc), said that the difficult economic landscape has forced Indian firms to look for new and innovative ways to grow their businesses, create efficiencies, and improve responsiveness.

The pressure is now firmly on to deliver technology-led business outcomes for their organisations, said Bahl. He added that small software exporters must still devote significant time and energy to maintaining existing IT infrastructure, but current economic trends in India coupled with the increasing expectations of digital customers are redefining the way business is done.

SMEs should embrace this opportunity to move their organisations beyond traditional technology approaches and leverage IT to enable business transformation. By doing so, they may become true business leaders, he said. The opposite, according to him, is also true - the players that fail to seize this opportunity risk losing credibility within the business stream.

Samir Jain, co-chairman, Nasscom Chandigarh Chapter, and director, Net Solutions, said the sliding rupee may help IT SMEs post gains but they will have to align with the new realities. "Price arbitrage is not great any longer; better quality outsourcing and getting more expertise in new domains are now areas of concern," he said.

"It is impossible to predict what would be the plight of SMEs in the long run, because the markets are quite volatile and if the currency appreciates, it would be difficult to absorb for SMEs," Jain added.

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