IT grapples with 20%+ drop in deal pricing on macro, AI impact
India's top software services exporters are facing a more than 20% drop in final client rates so far this year as elevated caution, tariff-led inflationary pressures and economic uncertainties dent pricing of IT projects, multiple analysts told ET.
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This scenario is expected to sustain leading IT firms to sharpen focus on cost efficiencies and
vendor consolidation
amid continued slowdown in technology spends by most corporate clients, the analysts said.
"We are seeing pricing drops as high as 20% in some competitive situations. It is impacting all major providers who are hustling very hard to renew business and get deals over the line at very favourable rates," said Phil Fersht, founder and chief analyst at advisory firm HFS Group.
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Most experts believe that new pricing models are being proposed as most clients and software services exporters are negotiating hard on existing renewal of projects not just due to the changing business environment but alongside the impact of artificial intelligence (AI)-led efficiencies and productivity gains.
Since the Trump administration took charge in January, there was an expected uptick in spending on software development from businesses in key markets of the US and Europe. However, the seesaw of tariff announcements delayed or paused decision making on existing and new projects, as corporates and consumers tightened spending fearing high-cost pressures.
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After Covid's strong growth period, the over-$280 billion technology services outsourcing industry has seen projects tilt towards cost takeout and vendor consolidation.
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