Mid-tier IT companies shine in Q4 even as wage costs squeeze margins

MUMBAI : Software services firms saw robust revenue growth in the March quarter, driven by strong deal wins amid accelerated digitization. Wage hikes, one-time bonuses and rupee appreciation impacted margins to some extent, which was partially offset by higher offshoring during the quarter.

Overall, mid-tier companies’ growth outpaced tier-I IT companies in the fourth quarter. However, analysts said, it does not signal growth moderation as the demand environment continues to be healthy. Management commentaries indicated a strong technology-spending environment, with a high focus on cloud migration.

A Mint analysis showed net sales growth of the top five IT firms— Tata Consultancy Services Ltd, Infosys Ltd, Wipro Ltd,