IT companies to lower contract prices

In the face of the ongoing economic downturn, many IT companies are reportedly receiving requests from international clients to renegotiate on the contracts and lower their prices.

According to an article in Mydigitalfc, the software firms have been requested to drop the contract prices by up to 15 per cent. This, in return, is likely to hit operating profits margins accounts for around 20-25 per cent mark in most companies.

Companies like TCS, Wipro, Infosys, and Tech Mahindra have agreed to the increased pricing pressure. During its quarterly result announcement, Wipro hinted about the reduction of base prices and consolidation of fixed contracts.

A spokesman for Tata Consultancy Services said that there is a pricing pressure of four to 15 per cent during contract renegotiations. The company is, however, confident about the operating margins and claims it to be around 24 per cent, by increasing pushing the work to off-shore locations.