Computer Services

Appreciating rupee hits software industry’s turnover, margins

New Delhi’s decision to extend the tax concessions to software companies under the software technology parks of India scheme for another year could not have come at a better time. The industry that topped the list in terms of most corporate track records for nearly a decade now, has witnessed sharp deceleration in its business growth in 2007-08.

Appreciation of rupee against dollar, rising wage bills and economic slowdown in the US, where a majority of India’s outsourcing clients are located, have affected the performance of the industry badly. An ET survey of 50 large software companies finds that their aggregate net sales have grown 25% in 2007-08 against 40% in 2006-07 over the previous year. Aggregate net profit of the sample companies has grown 19% last year compared to 47% in the previous year.

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