Monday, October 8, 2007

Is falling US Dollar going to slowdown the growth of Pune Real Estate?

Dollar's fall raises costs of outsourcing to India :

Around the globe, the falling dollar is touching everyone in the business world, from Saudi oil princes to U.S. computer makers, making American goods and services cheaper while raising the cost of foreign products, writes Sam Zuckerman of San Francisco Chronicle.

Impact :

Not only major IT companies, Infosys, Wipro and Tata Consultancy, but even small IT companies in Pune are also affected by the falling US dollars. The way these companies are facing this issue, i feel, is going make a huge impact on the over priced, over budgeted Pune real estate market.

On the individual level impact is instant. Uncertainty about pay scale, unstable job and place of work will turn EMI into a big financial risk and this is going to discourage a buyer from booking. I think we have to take a closer look at this issue.

Save Money :

The reason U.S. companies went to India for technology in the first place was to save money. Workers there in the outsourcing sector earn roughly one-eighth as much as their American counterparts, according to experts on India business. And software development services that might cost $200 to $275 per person per hour in the United States can be bought from an Indian company for $25 an hour or less, those experts note.

Cost Advantage :

The past year, the dollar has fallen from about 45 rupees to about 39. That 13 percent drop, on top of significant pay increases there, has shaved part of the Indian cost advantage, forcing buyers and sellers of technology services to adapt. Economists expect the rupee to strengthen over the long term as India's economy matures.

Solutions :

Wipro Technologies :
Hire American tech workers, who have suddenly become a lot cheaper!
Bangalore technology giant Wipro Technologies recently unveiled a plan for a software development center in the Atlanta area that ultimately could hire 500 programmers.

Tata Consultancy, Wipro and Infosys :
Expand in other countries!
The giant Indian technology conglomerates such as Tata Consultancy Services, Wipro and Infosys Technologies are hedging their bets by expanding in countries such as China, where costs are lower than in India. They're also building business with European countries whose currencies have stayed relatively stable compared with the rupee.

Globalisation :

While enjoying the benefits of the Foreign Direct Investment, we have to be ready to face the challenges of the globalisation. Mr. Chandrasekaran Balakrishnan has written a great article "Impact of Globalisation on Developing Countries and India". He says,

"Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions."

1 comment:


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