IT Companies Now Generate Higher Revenue From Fixed Price Contracts

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The USD 120-billion information technology industry now generates almost half of its revenue from fixed price contracts. While this indicates the rising comfort of overseas clients in dealing with Indian software providers, industry watchers feel that the trend may result in thinner margins and fewer job additions in India.

The rising preference for fixed price contracts is further giving credence to the theory that the industry days of big-bang hiring may be over. Sanchit Vir Gogia, founder CEO at advisory firm Greyhound Research, believes that fixed price contracts will have a direct bearing on hiring trends.

“Many fixed price contracts are in fact managed service deals. They do not require as many human resources as compared to the traditional IT outsourcing model.” As companies deal with increased automation internally and integrate emerging platforms such as social, mobile, analytics and cloud, they require fewer hands.

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