Rupee fall may not prop up margins of IT cos, attrition, pricing to weigh

Higher pricing pressures in legacy business and rising costs of delivery have been negating margin benefits from rupee depreciation over the last two years

The Nifty IT index has outperformed the Nifty 50 in the past one month and is currently near its two-month highs, thanks to a weak rupee, which fell by a sharp 99 paise against the US dollar last Tuesday. A weak rupee typically provides near-term support to margins of information technology (IT) companies. Analysts estimate that margins tend to gain by 20-25 basis point for every 1 per cent depreciation of the rupee against the US dollar. However, this time, it may be too early to think about any likely margin improvement.

Factors such as higher attrition, elevated sub-contracting costs