Introduction:
The global devaluation of the U.S. dollar against other currencies is a major cause of concern for the outsourcing industry all over the world. The impact of the weakening of the dollar against currencies of major outsourcing destinations, particularly India, has actually overshadowed other serious concerns like wage inflation. Let us review the impact of these currency movements and wage inflation on the outsourcing business in leading offshore destinations.
India:
The Indian rupee has significant strengthened over the last year against the U.S. dollar, falling from 45 rupees to 39 rupees per dollar. This huge strengthening of 13 percent coupled with significant pay increases has shaved part of the Indian cost advantage. Further, most economists are expecting further strengthening of the Indian rupee in 2008.
