Despite efforts Indian IT firms struggle to hike billing rates

Despite the hike, Pandit does not expect local companies to lose their competitive edge. “They (local firms) would still be more competitively priced than their MNC peers. Today, Indian engineers are billed at the same rate as the McDonald’s boys in the U.S. So, a 10-15 percent price increase will not take away their competitiveness.”

Also, Infosys Technologies is having a tough time to convince customers to pay higher prices besides the prevailing optimism among the tech vendors and the improved guidance, said Subhash Dhar, Senior vice-president and head of the communications service providers (CSP) business unit at Infosys. We’re trying (to hike prices) but it’s not working. The world economy is not like India’s. They (some Western economies) may have come out of the trough and there is no growth,” he said. Dhar said uncertainty continued to plague the global economy. “We are not really in a high-demand market yet.”

According to S Janakiraman, President and group CEO-product engineering services, MindTree, companies would tackle the margin hit from rise in wage cost by improving productivity. “Since we are doing more fixed-price projects (FPP) now than before, higher productivity has a direct impact on our gross margin. So, impact of wage inflation on margins can easily be managed by improvement in productivity,” he said.