Tata revenue down, profits up in tight market

The company said a full bounce back in revenue growth rates for outsourcing is still some time away

India's largest outsourcer, Tata Consultancy Services (TCS), reported on Friday a fall in revenue, but growth in profit, in U.S. dollar terms for the quarter ended Sept. 30, indicating that the outsourcing market is still difficult.

The company said that there is an improvement in market conditions, but cautioned that discretionary spending on IT and related services is still tight.

Spending in some sectors like manufacturing, telecommunications and IT is recovering very slowly, said N. Chandrasekaran, the company's CEO and managing director at a webcast press briefing in Mumbai.

"Don't expect a sudden bounce back in growth rates," Chandrasekaran said.

TCS' revenue for the quarter was $US1.54 billion, down by 2.3 percent from a year earlier in dollar terms. Revenue grew higher by 6.9 percent in Indian rupees mainly because of currency fluctuations.

The company was able to improve margins, despite pressure on billing rates for services, by moving more work offshore to India, improved utilization of staff and a continuous cost cutting program, Chandrasekaran said.

As a result, profit in the quarter, at $US336 million, was up 8 percent in U.S. dollars from a year earlier, and 29.2 percent in rupee terms.

Infosys Technologies, India's second largest outsourcer, reported earlier this month a decline in revenue and profit in U.S. dollar terms for the quarter, but the results were better than was forecast by the company in July.

Infosys' revenue for the fiscal year ended March 31 is forecast to be in the range of $US4.6 billion to $US4.62 billion, down by 1.0 percent to 1.3 percent from a year ago. The decline is however smaller than the 3.1 percent to 4.6 percent decline the company forecast in July. TCS does not provide guidance for the quarters ahead.

TCS added 320 staff during the quarter. The company said it would be adding 8,000 staff in this quarter, to prepare for an anticipated recovery. It added 30 clients in the quarter.

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John Ribeiro

IDG News Service
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