Wage increase, attrition rise to impact IT industry's margin: HDFC Securities

 IT industry's margins are expected to be impacted by wage increases as well as high attrition rate, said HDFC Securities.

"Margin will be impacted by wage increases, increase in sub-contracting or attrition, offset partly by operating leverage and FX or offshoring," HDFC Securities said in a report.

According to the report, strong deal momentum, broad- based industry-vertical trends towards digital transformation, positive cyclical indicators in product development or engineering services and consulting, accelerated hiring, and improving alignment with hyperscalers or 'SaaS' indicate continuity of momentum for the sector.

"'Tier-1 IT' is expected to deliver 4 per cent QoQ and 20 per cent YoY revenue growth."

In comparison, mid-tier IT is expected to post 3.5 per cent QoQ with larger mid-tier averaging '>4.5' per cent QoQ.

Besides, HDFC Securities has maintained a positive outlook for the industry.