Why TCS and Infosys Gain from a Falling Rupee | Case Study on Rupee Depreciation Impact

The rupee moving close to ₹90 per US dollar has raised concerns for many sectors, but for India’s large IT companies, it can actually be positive. These firms earn most of their revenue in foreign currencies but spend a large part of their costs in India. So when the rupee weakens, the dollar revenue they receive becomes more valuable in rupee terms.

To understand this more clearly, let’s look at two of India’s biggest IT companies, TCS and Infosys, and see how their numbers reflect this advantage.

Revenue Mix: TCS vs Infosys

This simple table shows how dependent both companies are on global markets.

Share of Revenue Coming From Outside India (Q2 FY26)

Both companies earn the bulk of their revenue in USD, GBP and EUR. This is the foundation of why a weaker rupee becomes a tailwind.

Source: TCS and Infosys Q2 Filings 

Margin improvement despite a soft demand environment

When the rupee weakens, operating margins generally improve because most costs are in rupees.

• TCS operating margin: 25.2 percent
• Infosys operating margin: 21 percent

Infosys also mentioned that 60 basis points of its margin came directly from currency tailwinds.

USD growth vs INR growth gives a clear FX advantage

One of the simplest ways to see the impact of a weaker rupee is to compare how much companies grow in USD terms versus INR terms. Let's look at their Q2 numbers:  

• TCS grew 0.6 percent QoQ in USD, but the same revenue translated into 3.7 percent QoQ growth in INR. 
• Infosys showed a similar pattern, with 2.7 percent QoQ reported growth, while its constant-currency growth was only 2.2 percent. 

These gaps appear only because the rupee weakened during the quarter.

This happens because most IT revenue is billed in dollars. When the rupee depreciates, each dollar they earn converts into more rupees. The underlying business growth may be modest, but the reported growth looks stronger simply due to the exchange rate. This is one of the clearest examples of how a falling rupee directly boosts the headline numbers for Indian IT companies.

Large deals (measured in dollars) become more valuable

Both companies reported strong deal wins:

• TCS total deal value: 10 billion dollars where north america contribute  $4.3 Bn
• Infosys large deal value: 3.1 billion dollars in the quarter

These contracts are mostly dollar-denominated, so they benefit directly from a stronger dollar.

Onsite-offshore mix also adds to FX benefits

Infosys reported a reduction in onsite mix and steady utilization at 85%. Offshore work is mostly rupee-cost based, so currency movement helps margins further.

What These Numbers Tell Us

The data clearly shows why TCS and Infosys gain from a weaker rupee.

Both firms have business models built around global clients. Nearly all of their revenue comes from outside India, while almost all their delivery happens from within India. When the dollar strengthens to ₹90, every dollar they earn from clients automatically converts into more rupees. At the same time, their biggest cost,  employee salaries,  remains in rupees, so their profitability improves.

TCS sees this advantage through a clear gap between its USD and INR growth. Infosys has openly said that currency movement added 60 basis points to its margins. Strong deals win in dollars and stable costs further expand this benefit.

In short, while a falling rupee may hurt import-heavy sectors, it tends to lift the financial performance of export-driven IT firms. TCS and Infosys are the best examples of how global exposure acts as a natural buffer and even turns currency volatility into an advantage.

Key takeaways for investors

• A weaker rupee generally supports IT companies because most of their revenue comes from overseas markets, so every dollar earned converts into more rupees.
• TCS and Infosys also benefit on the margin side since a large share of their costs is rupee-denominated, which makes their profitability look better when the rupee falls.
• The impact of currency movement shows up clearly in reported numbers, where INR growth is often higher than USD or constant-currency growth.
• However, these companies also hedge a part of their currency exposure, which protects them from sharp volatility but can reduce the immediate benefit of rupee depreciation.
• Currency is only one factor. Deal wins, client budgets, sector spending and cost control continue to be the key long-term drivers for these businesses.
• Investors should view currency as a short-term tailwind rather than a guaranteed long-term growth driver.

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