The Hindu Business Line : Re impact: IT services cos shifting from dollar billing

Bangalore Sept. 27 Reconciled to the fact that rupee might stay strong in the medium term, Indian IT services firms have begun to diversify their billing currency basket, which is currently dominated by the US dollar.

The 11.6-per-cent appreciation in rupee against the US dollar since the beginning of the year has impacted the profitability of the Indian IT firms.

At present, the revenue billing in US dollar terms varies between 70 and 85 per cent for Indian IT services firms and is expected to go down as these firms diversify into other markets and start booking revenues from their non-US customers in other currencies.

But companies feel that shifting customers to bill in local currencies is not easy because the global budgeting of clients is predominantly in US dollar.

iGATE Global Solutions has recently started billing a customer in Switzerland in local currency, Swiss Francs, said Mr N.Ramachandran, Chief Financial Officer.

Like other companies, iGATE still derives a bulk of its revenues in US dollar that currently accounted for 63 per cent of the total revenues as compared to 72-73 per cent some two-and-a-half years ago.

“Our revenue booking in US dollar is coming down as we have started billing new clients in their local currencies,” Mr Ramachandran said.

For example, in North America, iGATE is billing its Canadian customers in Canadian dollar and in Japan in Japanese Yen.

Large software exporters such as Wipro Technologies, which serves about 647 clients globally, books its revenues in 73 currencies. Wipro garners 73-75 per cent of its revenues in US dollar compared to over 80 per cent a few years ago. The company derives about 65 per cent of its revenues from the US.

“US customers operating from Europe still prefer to get billed in US dollar terms,” said Mr K.R. Lakshminarayana, CFO, IT business, Wipro Technologies. Billing in US dollar is coming down gradually as we expand in other geographies, he said.

Europe accounts for around 30 per cent of Wipro’s revenues, but billing in Euro/British Pound is about 23 per cent of the total revenues. About 4 per cent of Wipro’s revenues are billed in Japanese Yen.

MindTree Consulting’s CFO, Mr Rostow Ravanan, said shifting customers to bill in local or non-US dollar currencies has not been an easy task as the global budgeting of the customers is predominantly in US dollar terms.

“We have been requesting our customers to shift their billing from US dollar to local currencies as and when a deal comes for renewal and some are open to it,” Mr Ravanan added. About 80 per cent of MindTree’s revenues are billed in US dollar. Apart from US dollar, Euro and British Pound, MindTree bills a small portion of its revenues in Japanese Yen and UAE Dirham.