Dilemma of Indian IT companies

Many an Indian IT company face a dilemma today.

With a strengthening Rupee & a weakening Dollar, margins of most companies are getting squeezed between Dollar earnings (mostly export oriented) & Rupee costs (salary costs are the biggest chunk in the costs).

The obvious choice is to control (read minimize) costs via employee salaries. How many of these companies can do a Southwest (that abstained from layoff in tough times) & continue to pamper their employees with 10-15% annual hikes? Or is there a better way of managing employee morale?

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