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Weakened Rupee hits Indian enterprise channel business

Yogesh Gupta | Sept. 6, 2013
The weakening rupee against the dollar by almost 10 percent in August this year is creating a huge impact on the enterprise technology market in India.

"We absorb price hikes at most times and to some extent the OEM does (if an order has been negotiated with their knowledge)," says Khimani. "We are offering the flexibility to customers to choose depending on their convenience and their foreign currency exposures," says Nair.

Distributors, too, feel that end customers are the least affected from the depreciating rupee. The disty and partner community will be impacted with pressures on profits and lesser ability of vendors to support partners, thanks to the impact on their P&L, says Shah at Neoteric Informatique. With the rupee weakening at such a rapid pace, the entire eco-system has taken a beating of which vendors and distributors absorb the most while trying to cushion partners, feels Ashok.

"Customer's are reluctant to increase prices, VAR's and VAD's do not make margins to offset over 20% depreciation and hence look up to OEMs for support. This calls for support from all stakeholders including customers," feels Sriram.

Lesser Margins, Delayed projects
Giving a quote in USD or in INR with few days' validity only is the immediate precaution to absorb this change of price, says Mehta. "We are taking help of principals and their distributors to provide us back-to-back validity of price," says Jasani.

There is no one method to overcome this situation says Bindra. "We had to honour our quotes and very few vendors have been supportive in this situation. We are requesting OEMs to quote us in INR only and make sure these quotes are valid for fixed period of time, he says.

The short-term impact of the rupee's devaluation does have a bearing on disties and vendors. However, in the long term; the gap gets absorbed by consumers says Shah. "We may witness short-term delays in project execution by end-customers due to cost-escalation but once the price-hike becomes a reality, there might be renewed momentum, says Shah at Neoteric.

The rupee depreciation is definitely postponing projects, says Bindra. Only critical or urgent requirements are converting into order says Jasani.

The strengthening of the dollar will make customers think twice before investing in IT infrastructure and there is every possibility of projects being postponed till the rupee recovers, says Kumar at RAH Infotech.

The depreciation during August 2013 is the biggest ever, hence its impact on business will be serious and prolonged, says Sriram. VAD's need to work closely with OEM's to reduce the impact on partner and customer as they are best equipped to support others during such challenging times, says Sriram at iValue Infosolutions.

 

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