How would you handle unexpected fluctuations in currency exchange rates impacting outsourcing costs?

A extrema volatilidade cambial no Brasil ainda é um fen?meno a ser melhor explicado. Mas, a principal alternativa para prote??o continua sendo o mercado de derivativos cambiais, contratos de termo, futuros, op??es e SWAPs de acordo com o objeto de hedge. Tambem existem solu??es mais simples no mercado de cambio, como o Forward (cambio futuro) que podem ajudar. A volatilidade existe, mas ferramentas de prote??o est?o disponíveis!

Qualifying Criteria for Hedge Accounting. As per my experience below the best processes 1. Identification of hedged item (underlying exposure) 2. Identification of hedging instruments (derivatives) 3. Identification of nature of risk being hedged 4. Documentation of how the hedging instrument′s effectiveness in offsetting value changes in the hedged item will be assessed. 5. Determine the algorithm (method) used for assessing effectiveness 6. Determine the components of the derivative′s value change that is included in the subsequent effectiveness assessment 7. Derivative needs to be linked with the exposure in a hedging relationship 8. Effectiveness testing

As a freelancer I used to set a fixed rate in their currency with my clients for the contract with a review of rates periodically. This meant my clients were happy that they knew their costs, and happy clients are important for ongoing work. The rate reflected my normal rate + a small % to cover the conversation rate. As rates fluctuate over time this % was tweaked to handle smaller changes. You need to accept that you may get periods where you were not getting the same amount of money, but other periods you may get more.

To manage currency fluctuations affecting outsourcing costs, negotiate flexible contracts, use hedging strategies, monitor rates closely, diversify vendors, and adjust budgets or timelines as needed.

Em opera??es de alto valor e de prazos flexíveis, é salutar incluir clausulas de compartilhamento de riscos de mercado, afinal o prestador de servi?os deve ser um parceiro nos momentos de baixa e alta volatilidade cambial!

When developing large IT outsourcing service contracts, the pricing sections and annexes are essential, where the amounts, adjustments, and reviews of economic issues that must be carried out periodically by both parties (client and provider) must be very precise, identifying in a timely manner the effects on economic indicators (exchange rate, inflation, taxes, charges, etc.) by geography (country or region of the country where the services that support the different areas of the organization are delivered), with the objective of being able to make adjustments immediately in the event of any variation or fluctuation in the indicators that put the delivery of IT services to the business areas at risk.

The exchange rate is a serious problem, especially in economies in the South American region, where inflation levels are very high and exchange rate volatility is very strong. Exchange rate hedging, as well as periodic reviews (every 6 months or annually) are essential to prevent costs from falling excessively. Therefore, it is essential to perform an analysis of the geographies where we support business operations, in order to identify in advance the exchange rate and inflation risks that could significantly affect the prices of services and put the organization's business operations at risk.

I would like to share an experience I had with a vendor that won a contract in a global environment (we switched from our existing vendor) with operations in all continents (Europe, Asia, Africa, Oceania, and America). The contract offered many benefits to the organization and the price of the service was very attractive without compromising the quality of the service, but in one of them (America) their knowledge and presence was minimal, and we agreed that for the 1st year of the service they would hire the vendor that we had delivering the service, in the meantime they would generate the knowledge and increase their presence in order not to jeopardize the quality of the IT services.

When you establish a business relationship with a supplier, you make a long-term commitment, you invested a lot of time selecting the best one, and what you expect is that the supplier fulfills its part of the deal, it is important to have a good legal contractual framework that integrates the best practices used in this type of contracts, but within that legal rigidity there must be flexible clauses so that, if necessary, modifications can be made to both parties, since if for some reason the supplier's costs are affected by some economic variable, this could affect the quality of the services that support critical services of your organization, that is, there must be a win-win relationship.

Uma situa??o que pode ser abordada com parceiros internacionais é transferir o risco cambial, fixando a taxa de cambio, ou contratar um instrumento de hedge vinculado com o contrato, mesmo que isso signifique um custo adicional, já que em geral, instrumentos de hedge internacionais tendem a ter prêmios de risco menores que os contratados no Brasil.