The Art of Forex Management in the Indian IT Industry

Foreign exchange risk plays an important role in an organization's foreign exchange risk management strategies. Over 70% of revenue for most Indian IT firms comes from foreign clients (i.e. via exports). The transactions are usually quoted/executed in foreign currency denominations. Firms dealing in multiple currencies face a risk (an unanticipated gain/loss) on account of sudden unanticipated changes in exchange rates, quantified in terms of exposures. Therefore the companies, using the foreign exchange risk management practices shall be in a better position as compared to the companies not following foreign exchange risk management practices. The need of this study is to analyze the practices which are being used by the selected Indian IT companies and to analyze the impact of it on their profitability and other factors.