External hedging strategies of Indian IT industry to arrest the currency volatility

Foreign exchange risk turn out to be more and more imperative in graceful of the globalization and internationalization of world markets, and is one of the utmost challenging and persistent difficulties with which the financial administrators must handle. This study concentrates on the foreign exchange risk management practices of IT firms, and inspects the association between numerous aspects that are supposed to shake the espousing of External foreign exchange risk management techniques, namely currency derivatives i.e. Futures, Forwards, options & swaps. The study emphases on transaction exposures as the root cause for foreign exchange differences (loss or gain) The outcomes are taken from annual reports of 7 years commencing from 2009 to 2016, 10 information technology companies listed by BSE & NSE. The study uses one-way analysis of variances to analyze the data & Predictive analysis (multiple regression analysis), to assess the factors influence on the choice of derivative. To what extent losses are minimized through currency derivative. The results indicate that the use of foreign exchange risk management techniques such as financial derivatives is a common practice among IT firms due to large portion of revenue i.e 80% is earned in foreign exchange.