Quality of IT services

Quality slips as IT companies may be taking shortcuts to preserve margins - The Economic Times: "Indian companies, which have earned a reputation for delivering quality services at affordable rates and built a $100- billion ( Rs 5.3 lakh crore) sector, could be risking their image in pursuit of short-term gains, analysts and industry observers said.

The method they are adopting is quite simple - deploying less experienced and hence less expensive but more error-prone engineers where earlier they would put the best available resource on the job. And the main reason they are doing so is because the proportion of fixed-rate contracts in their revenue mix is rising - nearly 50% for some. At the same time, contracts where companies get paid for the number of hours an engineer works are on the decline.

From profit margins of over 30% during the outsourcing boom years that followed the Y2K crisis, profitability has now fallen to around 20% and is expected to be further dragged down by rising costs and competition. Revenue growth, too, is down substantially and will barely cross 10% in the year to March 2013."

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