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Rupee appreciation and the industry response.
The five year rupee dollar exchange rate clearly seems to trend towards a stronger rupee. Here's the picture from Yahoo.
Clearly, the industry has responded in a broad based fashion with multiple market and delivery levers getting pulled. Here is what I think would be the strategic implications:
-Long term contracts with US clients would becoming less attractive and compa nies would start looking at ways to avoid long term bill rate lock in.
-With top managers getting incentivized on margins, internal resource arbitrage would start happening with non US clients being able to command more senior and experienced resources. A rupee spent in servicing non US clients would add more to the bottomline than a US client.-Sales folks would start getting incentivized not just on topline but also bottom line and revenue quality. Not fair eh ? Well, people who sell profitable projects are better than people who sell unprofitable ones. Now, before I open up a pandoras box, let me move on to the next point.
-Fiscal management would move down to the project level and margin management which is currently a delivery management responsibility would start becoming a project manager responsibility.
-There would be an added incentive to apply the offshoring model to business segments like consulting to squeeze out even better margins. Standalone consulting that cannot be offshored in itself and does not lead to downstream business would be questioned.
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