Americans' zero savings rate weakening dollar: Premji
Friday, 30 May 2008, 13:27 Hrs
New York: Virtually zero savings rate among Americans is the basic cause of the weakening dollar, which in turn is adversely affecting Indian IT firms, believes Azim Premji, chief of Wipro and an outsourcing pioneer. "I think the fundamental problem (behind the weak dollar) is the very low savings rate among Americans - virtually zero percent. In India, it's 35 percent and in China 45 percent," Premji told Forbes. When asked by the US business magazine whether he was worried about the weak dollar, he said: "The weak dollar is not good for our business, since we get paid in dollars." However, he thought the dollar has stabilised and will not get much weaker, "because the US is a source of creativity and innovation". The weakening dollar against a stronger rupee has been hitting the bottomlines of Indian IT firms, including the top three - Wipro, Infosys and TCS - as exports account for a major chunk of their revenues. Asked about India's ability to attract high-tech industries requiring highly skilled people, the chief of Bangalore-based Wipro that boasts annual sales of about $5 billion, ascribed it to a strong base of engineering colleges. "We will graduate 580,000 engineers this year. The US will graduate 75,000 engineers," he said. Recalling how he first got into outsourcing, a radical idea two decades ago, Premji said: "Just by footwork. To get an appointment with a design engineer, we had to wait hours. When Motorola and Intel became customers, they became a strong reference base for us." Premji was in New York to meet with analysts at the New York Stock Exchange, where his company is listed. He also met Microsoft's Bill Gates recently to "discuss our foundations because we do some joint work with them in India. I've known him for a few years, and they are a big partner of ours," he told Forbes.