India’s leading software exporters are warning about uncertainties in the global economic climate as they report earnings for their fiscal first quarter.
While a hike in demand for IT services has helped to boost quarterly earnings, there are concerns that rising wages may pressure margins.
India’s leading information technology firms – such as Tata, Infosys and Wipro – draw much of their revenue from the US and Europe.
And amid the debt crisis in Europe and worries over high unemployment in the US, there are concerns these will have a negative impact on their earnings.
IT firms maintain that despite uncertainties, demand for software services is growing.
After the recent global slowdown, they’ve aggressively started looking for business elsewhere to cut their dependence on the US and European markets.
They’re now adding new clients from the Middle East and Asia.
Market leader Tata Consultancy Services reported a 28 per cent growth in business in the April to June quarter as clients outsourced more services.
Suresh Senapati, chief financial officer of Wipro Technologies, said: “Four customers with a revenue more than US$100 billion (were added) and average revenue of top 10 customers has gone up in excess of US$100 million.”
Despite a rise in profit, margins are being squeezed because of an appreciating rupee.
And the US is now increasingly rejecting visas for Indian tech firms in a bid to boost local jobs.
There has also been pressure on wages.
Tata Consultancy Services recently announced its largest wage increase in three years to retain talent for future projects.