Domestic IT services companies increasingly absorbing staff of clients

Experts say the recent deals by TCS and Wipro will have impact on operating margin, but it will only reflect in the third quarter of this financial year

Continuing with their global approach, domestic IT services companies are increasingly absorbing employees of their clients in India in order to bag large outsourcing contracts. 

Though rebadging has become the norm of the industry, absorbing employees in big numbers in India could have a negative impact on operating margin of these firms, said experts.

“Indian deals are generally margin-dilutive. That’s the reason most domestic companies have never pursued Indian contracts aggressively,” said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting.  “In case of some of the recent contracts, what is the kind of impact on margin. But, net revenue