DECLINING OPERATING MARGIN

There was a decrease in operating margins in the first quarter of the

fiscal year of the leading IT companies because of the result of
variables like rising costs and a decline in deal wins. Analysts
attribute the decline margin and poor earnings growth to a faster
rise in operating expenses, especially the employee cost. Many IT
companies reported a decline in operating margin and deal closures
on both sequential and annual basis. Because of the pressure from
the supply side, the margins severely suffered and impacted
profitability negatively. Apart from this, businesses failed to meet the
profit expectations of first quarter.