Gartner Inc said the margins of Indian software majors would be under pressure with leading global software services companies like IBM Global Services and Accenture expanding their operations in India, taking away business from these firms and forcing them to cut billing rates.

Gartner Vice-President Bob Hayward said at a press conference here that companies such as Infosys, Wipro and Satyam among others would see a pressure on their margins as a result of the entry of global players.

"Global majors like IBM and Accenture have discovered the Indian advantage and are expanding operations here. They will be able to offer the global brand as well as the price offered by Indian companies. Accenture is hiring about 4,000 professionals in the country in the next 12 months," he said.

Hayward also said geo-political issues and the global economic scenario could spoil the boom in the domestic software services sector. "The biggest threat is the global economic scenario and the geo-political situation in the region.

Other issues are marginal. If the global economy takes longer to revive and US companies continue to cut their spending on technology, the Indian companies will have to worry," Hayward said.

Hayward also said the Indian companies would find it difficult to record high growth rates in the future. "The base and the size of the Indian companies have increased. They will not be able to repeat the 50 to 60 per cent growth rates now," he said.

He also said the proposed legislation by some US states to prevent software outsourcing to India would not affect domestic software companies.

"The regulations can only prevent outsourcing of government work. They cannot regulate commercial outsourcing," he said, adding that a move to stop outsourcing of any kind was against the spirit of free trade.

According to Hayward, US companies have benefited heavily by outsourcing to India.

Indian software companies also need not worry about losing business to their Chinese counterparts since their areas of competence were different, he pointed out.

"Chinese companies have expertise in areas like hardware, while Indian companies have known software skills. Besides, Chinese software companies focus on the domestic market," he said.

He, however, said the telecommunications sector had lost out major foreign direct investment opportunities to China as a result of India's poor infrastructure and the geo-political scenario.

Under threat

• IBM and Accenture will be able to offer the global brand as well as the price offered by Indian companies.
• Accenture is hiring about 4,000 professionals in the country in the next 12 months.
• Geo-political issues in the region and the global economic scenario could spoil the boom in the domestic software services sector.