Margins of IT companies likely to be hit with onset of pre-covid trends

BENGALURU : Bengaluru: Margins of IT companies are likely to be hit as clients renegotiate pricing and key geographies like the US and the UK begin to open up.

Higher profitability on the back of covid-led tailwinds like work-from-home and “offshorization” are transient in nature and are unlikely to outlive the pandemic, ICICI Securities said in a note.

“Even if they do, we expect their impact will be more or less blunted as clients renegotiate aspects like pricing/quality of deliverables in the new normal.”

Given the covid situation in India, resumption of office and overseas travel may at least be a couple of quarters away. However, in core markets like the US/UK which are progressing well on vaccination front, the situation is relatively rosy.