FACING MARGIN HEADWINDS, IT firms like Wipro, Tech Mahindra and LTIMindtree are reducing their exposure to low-value clients in the Asia-Pacific region.
Instead, these firms are concentrating on deals in the North America region. Though this region is witnessing a slowdown in tech spending, it offers higher margins than other geographical areas, known in IT circles as Row (Rest of the World).
"Tech Mahindra has businesses where margins are structurally low (eg high presence in low-margin RoW segment, specifically APAC) or has contractual structures with high passthrough component. We suspect such low or negligible margin business may be as high as 10% of revenue," analysts at Kotak Institutional Equities wrote.
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