Bangalore: NIIT Technologies Ltd expects earnings to rise this year as it wins more outsourcing business, but wage increases will squeeze margins in the June quarter, its chief executive said on Thursday.
The New Delhi-based firm, which offers software services to financial, transport and retail industries and manages a back-office unit, will increase salaries by about 16% for most staff in India this quarter.
“To some extent, this quarter will get impacted... It will certainly be less than the fourth-quarter margins,” Arvind Thakur told Reuters in an interview, a day after posting a more than doubling in quarterly earnings.
However, for the fiscal year to March 2008, the firm expects an increase of at least one percentage point in margins, which rose to 20.4% in 2006/07 from 19% in the year before.
“Obviously, that means that there would be profit expansion in some form or the other. Hopefully, that will get translated into net profit expansion as well,” Thakur said.
NIIT Technologies said on Wednesday its net profit in the year ended March nearly doubled to Rs1.29 billion ($32 million) from 663 million a year earlier, while revenue grew 46% to Rs8.86 billion.
Profit margins in the fiscal fourth-quarter ended March were 22% as it grabbed more jobs from Western clients and cuts other costs.