Bengaluru, July 21 -- India's IT services firms are fighting a war on two fronts: outmuscling one another to win large deals while absorbing the ballooning hardware costs that come with them.

At least two chief executives said the rising hardware costs were to be tracked, with one of them even expressing reluctance to give blanket discounts on IT deals to protect operating margins.

Large deals have always carried the risk of lower profitability than a company's overall margins. In the past, companies largely offset this by deploying executives in low-cost locations and recovering the losses during the initial phase of the contract.

However, rising hardware costs have disrupted that playbook. The timing could hardly be worse, with autom...