Impact of Greece crisis on Indian IT manageable: Expert

Big IT companies in India, are likely to see only a marginal 1-2% earnings impact from the economic crisis in Greece.

Jayarama Emani | The Dollar Business

In the era of globalisation, any major impact for any country would affect the global trade. However, the impact of the Greece crisis on Indian IT industry is manageable, said an IT expert. Speaking to The Dollar Business, J A Chowdary, Chairman, Talent Sprint Private Limited and Co-Chairman, FICCI-AP Chapter, said “European Union economy is a very important component in the current global trade & economy. Any adverse situation caused by Greece will impact EU economy. Hence, companies doing business with EU countries will be affected. However, at this point of time, India's position in the global trade & commerce is very positive, it being an ideal investment destination. Therefore, the crisis is manageable.” Supporting Chowdary’s opinion, a recently released report by global financial services firm, Bank of America Merrill Lynch (BofA-ML), said that big IT companies in India are likely to see only a marginal 1-2% earnings impact from the economic crisis in Greece due to their exposure to Europe. Their direct revenue exposure to Greece is “neglible’. The impact if at all, might be due to movement in the euro-rupee exchange rates. “While the direct revenue exposure of India IT to Greece is practically zero, there are linkages in the form of movement of euro versus Indian rupee and the spillover impact to growth outlook of other European countries to which India IT has business exposure,” it said in a research note. As per the BofA-ML report, large Indian IT companies have predominant revenue exposure to the Nordics, Switzerland and Benelux within the continental Europe. Germany and France are still relatively small markets (1-2 per cent of revenue), but are on a fast growth curve (especially Germany). The report further noted that given the deflationary effect of global sourcing and employee restructuring costs, the India-centric vendors are better positioned than incumbent players. The economic crisis in Greece has battered the stock markets globally, including in India, as foreign investors are looking to re-allocate their portfolios in the wake of weakness in the euro while the companies with direct exposure to Eurozone markets have been hit the hardest.    

July 4, 2015 | 1:28 pm IST.

The Dollar Business Bureau - Jul 04, 2015 12:00 IST