Through the 1990s and early 2000s, Indian IT companies flourished by targeting mature export markets, particularly in the United States. But that fruit is no longer as sweet as it used to be.
Software services market leader TCS showed double digit revenue and record net profit growth in the December quarter, but despite those great numbers, margins have taken a hit. The higher visa costs and rising protectionism in the US has some domestic political support, which means these challenges are unlikely to go away soon.
Increasing competition even as local costs due to more US based hiring mean these margin pressures will persist beyond this quarter. If US growth slows, there is not much to replace it with, which may make this the new normal.