Bangalore: NASSCOM (National Association of Software and Service Companies) on May 23 said Indian software firms will earn "lower margins" in the next two to three years due to stepping up of operations of global IT (Information Technology) majors in the country and customers offering large contracts at lower rates.

"The margins will come to the teens, whether it is one year, two or three years…it will come to the teens within two to three years. there is no way you can have high margins of 30 per cent any more," NASSCOM president Kiran Karnik told reporters.

He attributed a further decline in margins for domestic firms due to stepping up of operations of the world's largest IT firms like IBM and Accenture in India and customers becoming "smarter" in offering large and long-term contracts at reduced rates.

"Customers are offering large contracts like $ 30 million to companies and the deals are becoming cheaper," Karnik said on the sidelines of the conference on "Media, Information Technology and Grassroot Development" organised by the Press Institute of India.

While IBM, with over 4,700 employees in India, has said it aims to grow in "hundreds", Accenture plans to double its employees for its call centre and software development centre in Mumbai and Bangalore to 2,500 in two years and compete with Indian IT majors in rates.

PTI