Operating margins of IT firms to shrink yet again, due to H1-B visa curbs: Report

Facing all time low margins, India’s IT services companies could be staring at a further shirking of margins, thanks to H1-B visa curbs enforced by the Trump administration.

Employee expenses and cost per employee for Tier 1 players that includes TCS, Infosys, HCL Technologies and Wipro, rose faster at about 17 percent and about 9 percent on-year in fiscal 2019, respectively, compared with about 6 perent and 3 percent a year before, according to a new report by CRISIL. Employee expenses account for nearly 60-65% of total operating costs.

For mid-tier players, the increase in employee expenses was about 13 percent on-year for nine months ended December of fiscal 2019 as many are yet to declare fourth quarter results, the report noted.