Free Press Journal

Nasscom says euro fall may hit revenue from Europe


Mumbai: Software industry body Nasscom today said the currency volatility will impact companies deriving revenue from Europe, but is unlikely to directly impact its 12-14 per cent revenue growth forecast for the fiscal. “Companies which have greater exposure in Europe where the currency is going through a bit of decline, or sectors like telecom in Europe or oil or energy in Europe, there the impact is slightly more,” body’s President R Chandrashekhar said.

The USD 150-billion domestic software companies net around 20 per cent of their revenue from Europe, and the large chunk of over 70 per cent from North America. He further said the companies serving American clients will benefit with the strengthening in the dollar against the rupee, but this might be true only in the short-term. Chandrashekhar, however, said the ongoing foreign exchange trouble will not hurt Nasscom’s annual revenue growth target directly, but there could be an indirect impact on the revenue growth target by way of reduced IT spends by clients.
“Currency volatility impacts are only indirect, not direct. Chinese economic crisis and its impact on the global economy and on prices of commodities, fuel, oil etc could have an impact of IT spending on those sectors, and therefore indirect impacts could be there,” Chandrashekhar said.

Over the last fortnight, there has been heavy volatility in global financial markets due to worries emanating from China. This has seen the dollar strengthening against all major currencies. The rupee has also lost ground against the dollar, but has gained against the euro, which has led to these fears. The policymakers have been stressing that we are placed better among the emerging market peers.

“As an industry, we believe that volatility is not good and stability of the currency makes it easier for the industry to plan and strategies,” Chandrashekhar said. The RBI has been saying it intervenes in the market only to check excessive single-way volatility in the market.

Meanwhile, Chandrashekhar said the growth in Internet users, which crossed 354 million as of June, is happening faster than expected and companies need to gear themselves up with necessary strategies to flourish in the same. “The pace of change is surprising many people. People thought it is going to happen fast, but actually it is happening even faster than anticipated. The time to react is reducing and shrinking. Need for people is to take stock and adapt to these technologies is becoming much more,” he said.

Data released yesterday showed the country added 52 million Internet users in first six months of 2015, taking the total user base to 352 million as of June 30, a growth of 17 per cent year on year. Interestingly, 213 million (over 60 per cent) users accessed the worldwide web through mobile devices.