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Top IT companies<\/a> have been reporting pricing improvement in new digital deals due to inflation adjustment across their key markets like the US and Europe.
However, analysts suggest that depreciation of the rupee against the dollar (over 10% since January) can potentially be a deterrent in getting better pricing owing to the general perception of supply getting relatively cheaper, which will result in demands for pricing discounts in a cash-strapped environment.
During the July-September quarter, dollar revenue growth of IT services companies was weak due to cross-currency headwinds of 100-280 basis points (bps) quarter on quarter led by depreciation of European currency against the dollar, according to an analysis by ICICI Direct.
Cross-currency headwinds are likely to impact dollar revenue in next two quarters as well, the brokerage noted.
Everest Group<\/a> chief executive Peter Bendor-Samuel said service providers have been getting pricing benefits for the last 3-4 quarters. They have now started realising a meaningful impact on their P&L as these deals have ramped up and the overall mix of deals with better pricing terms has improved, he said.
“However, getting such benefits will be challenging as demand slows down and the macroeconomic environment worsens,” Bendor-Samuel said. “We expect this to start playing out after the next two quarters. Depreciation of the rupee against the dollar can potentially be a deterrent in getting better pricing, owing to the general perception of supply getting relatively cheaper.”