Vendors of information technology services may try to push the billing rates up by 4-5 per cent this year in order to counter challenges of currency fluctuation, rising staffing costs, attrition and mounting inflation, according to advisory firm Offshore Insights.

“As clients plan to ramp up their offshore work, many are about to face an unpleasant surprise. Vendors, who were quite flexible and ready to negotiate until very recently, will now become a little tough to deal with as they push rate escalations,” said Mr Sudin Apte, Chief Executive Officer of Offshore Insights.

This is in line with the recent comments made by officials from the top IT service companies.

Mr N. Chandrasekaran, Chief Executive Officer and Managing Director of Tata Consultancy Services, had said recently that his company saw an increase in billing rates in the last two quarters.

Clients will continue being frugal in their approach with vendors.

“With annual salary revisions due this quarter, total costs are bound to go up. But, with continued budget pressure, our research shows that clients are in no mood to increase billing rates,” said Mr Apte.

Instead of fretting over increased billing rates, Mr Apte said, clients should focus on “extracting higher value and innovation from their offshore spending”.

“They should explore new pricing mechanisms and delivery models to keep costs under control and focus on total cost of ownership of the work/projects they send offshore, rather than rate cards,” said Mr Apte.

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