Talk about bad luck. Indian IT outsourcing, a runaway success story for much of this decade, is now under pressure on several fronts. It derives the bulk of its revenues from the US, and is particularly exposed to the banking industry, which is desperately cutting costs. Profit margins, meantime, are under attack from wage inflation and currency appreciation. The Indian rupee rose 11 per cent against the dollar in the last fiscal year, eroding profitability since billings are largely in dollars while costs are mainly rupee-denominated.

Nascent signs of a squeeze were evident in first quarter results. Tata Consultancy Services, India’s biggest computer services company, reported its first quarter-on-quarter fall in net profits since listing in 2005. Even companies that did not register narrowing operating margins in the fourth quarter, on a quarter-on-quarter basis, anticipate a drop in earnings growth this year.