Rupee's fall may not prop up the margin of IT companies: Analysts

Higher attrition, elevated sub-contracting costs and pricing pressure are likely to negate benefits from a weak domestic currency

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 cherish about any likely margin improvement.

Factors such as higher attrition, elevated sub-contracting costs and