The Indian IT Services sector is known for delivering quality services at affordable prices. This is turn has helped the sector to grow to a nearly US$ 100 bn industry today. However, the global crisis has dampened the demand for the sector in recent times. Companies are now fighting for market share as the size of the market is not increasing. This has led to intense competition amongst the IT vendors. As a result companies have come under pressure to protect their margins. Accordingly, companies have been forced to find out innovative ways of cutting costs.

Many companies are now employing less experienced and cheaper software engineers to execute projects. This in turn ensures that the costs are lower but has had an adverse impact on the quality of work being delivered. Interestingly the companies are getting away with this to a large extent. According to a leading IT Services Company, European clients are more conscious about high quality rather than costs as compared to their US counterparts. Therefore a reason why lower quality has not really hurt the Indian IT companies could be lower demand from Europe due to the crisis. But eventually lower quality is bound to come back and haunt the Indian IT companies. Compromising quality is actually the best way to lose a client. It would be best for IT companies to clean up their work. Otherwise the stable to improving margins may just be a short term trend.