New Delhi, Sept 23: Pressure is easing on billing rates of software services exporters due to more business from the main US market even though margins continue to fall due to a rising rupee, an industry body said on Tuesday. Average rates the $9.5 billion sector charges clients have come down in the past three years after the dotcom bust, a global slump in technology spending and growing competition.

But Kiran Karnik, president of the National Association of Software and Service Companies, told reporters there were signs of revival in the US economy, which accounts for close to 70 per cent of the sector`s exports.

"The demand for software services from the United States is increasing very much and we don`t see as much pressure on billing rates -- they`ve steadied now," Karnik said. "Firms have also learnt to negotiate better. They`re walking away from deals, refusing to go below a certain level."

For more than a decade, India`s showpiece software industry has blended low-cost white collar workers with cheap, high-speed telecoms to serve global firms across the world.

Karnik said the rupee`s rise against the dollar remained a challenge to the export-oriented sector because it was causing further erosion in operating margins that are already under pressure due to rising marketing costs and staff salaries.

The rupee has risen 4.6 per cent against the dollar so far this year because of growing foreign exchange inflows into Asia`s third largest economy. The currency gained over 0.5 percent in 2002, in contrast with average declines of about five per cent each year in the previous decade.

"I do see an impact on operating margins, but this year it should be less than last year`s 3.0-5.0 per cent fall because companies are now hedging their exposures," Karnik said.

Analysts say a one per cent appreciation in the rupee can have a 2.5 to 3.0 percent impact on the net profit of a mid-sized software firm. Bureau Report