Offering regional and national programs, CIO (and CSO) events bring together some of the most respected names and thought leaders in information technology and security. Presented by CIOs and other senior level executives, these invitation-only programs offer timely topics and strong networking. Learn More »
Public Council Teleconference: Application Rationalization — Hidden Costs and Smart Decisions
November 17 at 11:00 am US/Eastern (GMT-5)
Join Honorio Padrón, of The Hackett Group, who will share the drivers for companies to tackle application rationalization and the results of research that define the hidden cost of complexity. Additionally, we will discuss key decision milestones—to start or not, holding the course steady and fulfilling expectations.
Virtual Desktop Cost-Benefit Analysis — Michael Jacobs, Catlin Group
The analysis contained in this presentation measures the cost of everything from the machines and licenses to the infrastructure for virtual vs. traditional desktop environments.
Honor your best senior team members - Apply for the CIO Ones to Watch Award
Get well-earned public recognition for your top up-and-coming team members, your IT organization and your enterprise. Award winners will be announced, publicized and feted in May 2010, great timing to help attract new IT recruits to your company.
Learn more about the CIO Executive Council »October 03, 2007 — CIO —
The rise in value of the Indian rupee, while a signal of the increasing strength of India’s economy and potential boon for the general population, is being treated as bad news by Indian outsourcing providers and their customers. So far this year, rupee appreciation has eroded about 11 percent of the dollar’s purchasing power in India, impacting Indian IT services providers, who make an average of two-thirds of their revenue in U.S. dollars but incur more than half their costs in rupees.
The inflow of dollars to India is at an all-time high, creating a surplus, says Sumeet Salwan, director of supplier relations for offshore outsourcing advisory neoIT. As of Oct. 1, 2007, one U.S. dollar was worth 39.65 Indian rupees, more than 10 percent less than its worth (45.79 rupees) a year ago. And experts do not expect the Reserve Bank of India to do much more to stem rupee appreciation because of inflation fears. To put the currency situation in historical context, the dollar hasn’t dipped this much against the rupee since 1996. The dollar’s fall is part of a larger trend of dollar weakness against a host of currencies around the globe.
Offshore vendors in India specifically are struggling to find ways to counter the currency imbalance. The rising rupee is hitting midsize Indian providers—such as Syntel, Polaris, Mastek and iGate—the hardest because their margins are much slimmer than those of the bigger Indian outsourcers. “Losing 3 or 4 percent from 25 percent profits is one thing,” says says Sudin Apte, Forrester Research analyst and country manager for India. “Losing 3 to 4 percent from 9 or 10 percent profitability is another.”
For the first time, some vendors are coping by charging non-U.S. customers in their local currencies rather than in U.S. dollars. IGate, for example, is billing Japanese customers in yen, Swiss customers in Swiss francs and Canadian customers in Canadian dollars, although it still garners the majority of its revenues in U.S. dollars.
Many providers, including Infosys, Wipro, and Satyam, have also worked to improve their employee utilization rates—the average percentage of employees who are billable. “As people move on and off of projects, there is a natural ‘waste’ that occurs,” says Dean Davison, vice president of research for neoIT. “It is considered very good to be 80 percent utilized.” Major Indian vendors have announced utilization improvements of 1 to 4 percent, and Davison expects more improvement in this area.