Margins under pressure owing to higher wages: Sonata Software

Sonata Software delivered a healthy set of third-quarter numbers, reporting solid revenue growth. IT services revenue growth was at 8.6 percent on a constant currency basis, but the margin performance was muted. Jagannathan Chakravarthi, CFO of Sonata Software spoke to CNBC-TV18 to discuss the earnings fineprint.

Chakravarthi said, “The International business that is software services business had a very strong quarter on quarter growth for this quarter in terms of dollar number on the content currency. Coming to margins, we have been telling the average cost of getting people is going up, we also need to increase the salary of people to have a retention mechanism for the people.”

He added “In this quarter a very small amount of cost increases have been absorbed,  January to March quarter will be the biggest increase for us and then in April quarter the second leg will come, but the major portion is going to come in January quarter. So this can have an impact on margins of about a percentage or so or maybe 1-2 percent in the coming next quarters.”