National Association of Software and Services Companies said on Friday that Indian software firms will earn "lower margins" in the next two to three years due to stepping up of operations of global IT majors in the country and customers offering large contracts at lower rates.

"The margins will come to the 'teens' within two to three years. There is no way you can have high margins of 30 per cent any more," Nasscom president Kiran Karnik told reporters in Bangalore.

He said factors that were responsible for projected decline in margins of domestic firms were stepping up of operations of the world's largest IT firms like IBM and Accenture in India and customers becoming "smarter" in offering large and long-term contracts at reduced rates.

"Customers are offering large contracts like $30 million to the companies and the deals are becoming cheaper," Karnik said, on the sidelines of the conference on 'Media, Information Technology and Grassroot development,' organised by the Press Institute of India.

While IBM, with over 4,700 employees in India, has said it aims to grow in "hundreds", Accenture plans to double its employees for its call centre and software development center in Mumbai and Bangalore to 2,500 in two years and compete with Indian IT majors in rates.