Dollar's Dive Dents Infosys

Cognizant shares were recently trading down $2.42, or more than 3%, to $73.18.

Currency appreciation and wage inflation have dogged the Indian firms for the past two quarters. As demand for outsourcing services increases, IT service providers from both the U.S. and India have bid up wages for network and software engineers as they scramble to increase their workforces in Bangalore and other Indian IT centers.

Infosys has been the most active among its peers to hedge against currency appreciation. Cowen analyst Moshe Katri attributes most of Infosys' first-quarter earnings-per-share growth to currency hedges. Katri doesn't own shares of Cognizant, but Cowen makes a market in its stock.

Infosys has also tried to offset the rupee's rise by shifting more work to India, rather than performing it at a client's site. This helps to increase the usage of offshore employees that might otherwise be idle.

But investors are clearly worrying that the trends pushing up the rupee and local wages will persist for years as India's economy continues its rapid growth.

"We think these companies can absorb small currency headwinds, but the longer term trend is worrying," says Thadhani, referring to the India-based IT outsourcers.

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