So does India’s export-intensive IT industry have reason to worry, especially at a time when the rupee is fast appreciating against the dollar? When The Indian Express put this question to India’s top IT companies, they all said that India might actually stand to benefit from a slowdown. They said when budgets are slashed in a slowdown, companies outsource even more to cut costs and increase efficiency.

Even so, in order to safeguard themselves from a shock from the US, they are reducing their dependence on the US and diversifying to newer markets.

“Our dependence on the US has declined from 59.3 per cent to 54.3 per cent, while our revenues from Europe have gone up from 25.7 per cent to 30.2 per cent,” said Vineet Nayar, president of HCL.

Satyam’s chief financial officer, Srinivas Vadlamani, said the firm’s dependence on US is now below 60 per cent, sharply down from 85 per cent five years back. “We are exploring new markets like Asia Pacific, Japan and Latin America,” he said.

India’s second largest software maker, Infosys, too has seen revenues from Europe go up from 24.5 per cent to 26.4 per cent, as has NIIT.

Europe is a market that is leading the pack for diversification. “The Euro zone is experiencing its fastest growth in six years,” said the IMF report.

In addition to a fast-growing market, in terms of exchange rates too, the euro has been strengthening with respect to the rupee while the dollar has been weakening. This means Indian products become cheaper in the European market while they become more expensive in America.

When the rupee weakens in terms of the euro, it implies a higher revenue for the company. The weakening dollar has had an impact on the margins of IT companies. For instance, in the third quarter, every percentage point appreciation of the rupee had a negative impact of 35 basis points on HCL’s margins. The depreciation of the rupee against the euro had a positive impact of 13 basis points. “For us, Europe is growing faster than the US,” said V Balakrishnan, CFO of Infosys.