Most Indian IT services companies have exposure to the banking and financial services industry. However, they have very few clients that are in the mortgage processing or subprime business, the report analysing impact of subprime, or lending to people with poor credit history, on Indian IT services said.
“With all large caps clarifying that the exposure to the subprime segment is minimal, that is less than one per cent of the revenues, we do not see any material impact on earnings or visibility,” Citigroup analysts Surendra Goyal and Hitesh Shah said. On the other hand, the Rupee has depreciated 1.5 per cent against  USD in the last two weeks. The rupee could remain weak in the short term due to curbs on the foreign currency borrowing, volatile stock markets and slowing merchandise exports from India.
Good for Indian cos
“The weakness would be positive for Indian IT companies,” the report said. In the long-term, Citigroup believes that a slowdown in US is good for Indian outsourcing industry as the focus on cost optimisation would go up.
The report said that a sharp US/Global slowdown could result in medium term pressures due to freezing of IT budgets for the short term. This could lead to quarterly volatility for Indian IT services players. Besides, large IT players have reported strong revenues for the June quarter, growing by 40 pc y-o-y and Wipro, Satyam and HCL have least exposure to the banking and financial services industry.