Wage troubles for Indian IT

Firms such as Infosys, who had frozen annual wage hikes in April last year due to the business downturn, are expected to raise the salaries for all its staff this month, putting pressure on their margins.

Brokerage Macquarie said in a report that currency and wage inflation would be key headwinds for margins in 2010/11.

TCS shares have risen 8 per cent so far this year and those of Infosys are up 4 per cent, compared with the 4 per cent rise for the IT sector index. Despite the relatively modest stock gains, valuations are seen as somewhat rich.