Tata's revenue, profits soar despite uncertain environment

Analysts however caution that a lot of the business is pent-up demand after the recession

Tata Consultancy Services (TCS), India's largest outsourcer, reported on Monday strong growth in revenue and profit for the quarter ended Dec. 31, citing a strong demand for its services.

TCS' revenue for the quarter was US$2.14 billion, up by 31 percent from the same quarter in the previous year. Net profit of $517 million for the quarter was up 35 percent. The results are in accordance with U.S. accounting rules.

Based on discussions with customers, the company expects its customers' IT spend to remain the same or improve, TCS CEO and managing director N. Chandrasekaran said at a news conference in Mumbai. TCS and other Indian outsourcers derive most of their revenue from North America and Europe.

The results from TCS follow similar strong results from Infosys Technologies, India's second-largest outsourcer. Infosys said last week that revenue was up by 28.7 percent from the same quarter in the previous year, while net profit was up by 18.9 percent.

There is, however, still uncertainty for Indian outsourcers on a number of fronts. The industry has not yet seen a return to growth that is guaranteed to be long term, said Siddharth Pai, a partner at TPI, a sourcing data and advisory firm.

The return to growth has been confined to a few large Indian outsourcers, who are mainly benefiting from a surge in pent-up demand after the recession, and because more work is now moving offshore, Pai said. The Indian outsourcing industry at large has not reached the high growth levels before the recession, he added.

The weak economic recovery in the U.S. and the sovereign debt crisis in Europe could still impact the growth of the offshore industry, Infosys cautioned. Chandrasekaran said the macroeconomic environment was still "dynamic".

Costs are also increasing for Indian outsourcers as they compete for staff with one another and the Indian subsidiaries of multinational services companies such as IBM, Accenture, and Hewlett-Packard. TCS for example added 12,497 staff in the quarter and expects to add between 12,000 to 15,000 staff in the next quarter.

To keep their costs low, Indian outsourcers are focusing more on campus hires, said Jimit Arora, research director at Everest Group.

The appreciation of the Indian rupee against the U.S. dollar and the U.K. pound has also affected margins, as it affected the revenue in rupees for these companies. However despite these pressures, TCS was able to grow its margins, said Chief Financial Officer S. Mahalingam.

TCS added 35 new clients in the quarter.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesservicesoffshoringoutsourcingfinancial resultsTata Consultancy Services

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?