India, the biggest location for global outsourcing, has seen its currency take a tumble. The devaluation has fattened the profits of Indian outsourcing providers, but customers in the U.S. are unhappy that they’re not getting any benefit from the currency’s move.
The rupee has fallen hard against the dollar amid concerns about the Indian economy, getting as high as 68 per dollar in late August. By mid-September, it was trading at 63 per dollar, up from 54.77 at the start of 2013 and 45.12 at the start of 2011.
Going forward, there are a number of ways a U.S. company could take foreign exchange considerations into account when they’re arranging outsourcing deals.
U.S. companies could switch to paying in rupees, but Rutchik said many aren’t comfortable doing that. “They’d rather just keep it in dollars,” he said. “It goes into the budget, they know what they’re spending, it’s not going to move.”