The improved business demand and deal flow has made various major IT firms to expect to post up to five percent growth in dollar term revenues in the third quarter of the fiscal year.

However, analysts warned companies to not increase salaries of their employees, as it may cast some undue pressure on the profit margins of the software firms.

Diptarup Chakraborti, Gartner's Principal Research Analyst said, "We have an optimistic outlook for the IT sector. Margins will stabilize gradually. Q2 was a turnaround quarter for the IT industry and we believe that the trend would continue in Q3 as well".

The IT majors are speculated to post large volume growth because of higher business integration and transformation work coming from mergers and acquisitions despite of lower working days during the quarter.

The rupee has witnessed a 3 % increase against the US dollar during the December quarter, and 4.47 percent on an year-on-year basis.