Tech Mahindra CEO Aims to Raise Prices as IT Budgets Shrink

(Bloomberg) -- Tech Mahindra Ltd. is in talks with clients to raise prices for its software services as the company tries to alleviate margin pressure from rising employee wages, its top executive said.

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Mahindra’s order book and deal pipeline was promising and a 16% dive in Mahindra’s net income during the June quarter was a “temporary blip,” Chief Executive Officer CP Gurnani told Bloomberg Television’s Juliette Saly and Yvonne Man on Tuesday. The company is now working to increase productivity particularly from its offices in smaller cities, the CEO added.

“In the short term we are working on price increases with our clients,” Gurnani said. “We do realise that there are salary corrections to be done.”

India’s $227 billion IT industry is bracing for an economic slowdown with some analysts predicting a global recession. Tech Mahindra, which competes with larger rivals Tata Consultancy Services Ltd. and Infosys Ltd., reported lower-than-expected net income for the June quarter of 11.3 billion rupees ($142 million), while operating margins fell to 15%.

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