Tata posts strong revenue, profit growth as offshoring recovers

Latin America showed strong growth among emerging markets

Tata Consultancy Services had strong revenue and profit growth in the fourth quarter, indicating that the offshoring market is recovering.

The business momentum is expected to continue in 2013, as customers invest in more efficient systems and in particular cloud technology, N. Chandrasekaran, CEO and managing director of the Mumbai company, told reporters on Monday. The deal pipeline looks strong, he added.

TCS' revenue increased by 14 percent year-on-year to nearly US$3 billion, while net profit of $652 million was up 14.8 percent from a year earlier.

Revenue growth in rupees was higher by 22 percent while profits were up 23 percent, because of the depreciation of the Indian rupee against the dollar.

TCS' growth has been balanced across markets, industries and services. Among mature markets, growth came from the U.S. and the U.K. with the rest of Europe still soft, Chandrasekaran said. In the emerging markets, Latin America showed high growth quarter-on-quarter, followed by India.

Growth was highest in the banking, financial services and insurance, energy and utilities, and manufacturing and retail and distribution industry groups.

The company added 9,561 staff in the quarter taking the total to 263,637 at the end of the quarter.

The offshore market will grow this year by 12 percent to 15 percent, driven mainly by North America, as Europe is expected to lag for another year, said Sudin Apte, principal analyst and CEO of Offshore Insights. More than 50 percent of customers polled by the research firm around November said that their IT spending would increase. In the previous year, hardly any companies expected to increase their IT spending, the research firm said.

Infosys, the second largest Indian outsourcer after TCS, said last week that its revenue for the quarter was $1.9 billion, up 5.8 percent from the same quarter last year, helped by the company's acquisition in the quarter of Lodestone Holding, a management consultancy firm in Zurich with skills in the area of SAP software. The company's net profit of $434 million in the quarter was, however, down from $458 million a year earlier because of investments in new businesses, and a wage hike in India.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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