You just need one puff on higher margins to get hooked. Then it becomes a habit that you can’t kick. Indian IT vendors like Infosys, TCS, Wipro, Satyam have all been addicted to this margin fixation.
Even stock markets gave them a higher PE multiple of 25-30x owing to their phenomenal growth fueled by these margins. Sustaining that growth seems a bit difficult since dollar depreciation, wage escalation and higher visa costs are taking a heavy toll.
If one goes by the acreage of real estate assets developed by these vendors during their growth years, the value of which is now many times over, they won’t lose too much sleep over stagnating margins.