Margin pressures for IT companies in March quarter as business costs rise

Revenue growth, however, is expected to be robust due to a strong deal pipeline.

The software sector's revenue grew in the March quarter, but it is expected to report pressure on margins due to higher costs and an appreciating rupee.

In a traditionally weak quarter, top tier IT companies are expected to post sequential revenue growth of 1.5 per cent to-2 per cent on the back of recent deal wins and execution of the same.

However, margins are expected to be weak due to higher costs. Amit Chandra, of HDFC Securities, said there are headwinds for profitability. Higher onsite or localisation of operations coupled with lower H-1B employee count is expected to increase staff