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Weak rupee helps IT employees working abroad

Views 5 Views    Comments 0 Comments    Share Share    Posted 07-12-2008  
8 Dec 2008 ,The rupee’s slide against the dollar is not a bad news for everyone in the IT sector. While IT companies are suffering substantial forex hedging
losses due to the depreciating rupee, their employees
, who work abroad on short-term projects and earn in dollars, are finding the rupee’s fall to be beneficial.

The rupee has, so far, depreciated by more than 20% against the dollar since the beginning of the current fiscal. It has also weakened against other currencies, including the UAE dirham (21% depreciation) and Singapore dollar (12%). This has proved to be a windfall for IT professionals who work on overseas assignments and earn in these currencies.

This is because when these professionals return back to India after a span of 2-3 months, they can convert their foreign currency savings at a more favourable currency rate. The rupee’s fall adds to their gains. In the past two months, the rupee has depreciated by as much as 14% against the dollar.

IT employees, who work abroad on short term assignments — usually not more than three months — get their monthly salary in rupees. Apart from this, they also get a reimbursement for daily expenses and daily allowance, both in the local currency of the country of deputation.

While reimbursement of daily expenses is at actuals and requires submission of valid bill vouchers, daily allowance does not require submission of such documents. Thus, employees who save daily allowances can convert their savings into rupee once they are back home.

The amount of forex remuneration varies from company to company and there is no particular industry format for this. Also, not all companies provide higher allowances. “For us, it won’t make much difference as incidental expenses are at actuals and the amount of daily allowances is very little,” said Puneet Jetli, senior VP at MindTree, who also heads the company’s people function. He also thinks that given increased focus on offshoring, the onsite opportunities are not as abundant as they were in the 1990s.

However, in case of companies that offer higher allowances, the sharp downward trend in the rupee has brought some relief for the outbound IT professionals who are facing austerity measures, including cut in salaries and bonuses given the global slowdown. “The weakness in the rupee offers some help at a time when budgets are constrained and salary hikes are not expected to come easily,” said a software programmer who works at the Mumbai development centre of an IT company that features among the top- 10 Indian IT exporters.

“I am now more eager to go back to onsite once again to save some more money simply because of the depreciation in the rupee,” said an employee of a Bangalore-based IT company, who came back to India from Dubai six months back after a project delivery.

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