Tata posts strong revenue, profit growth, signaling recovery

The appreciating rupee is however still a concern for Indian outsourcers

Tata Consultancy Services (TCS) signaled a stable recovery for Indian outsourcers when it reported on Monday strong revenue and profit growth in dollar terms for the quarter and fiscal year ended March 31.

TCS, India's largest outsourcer, as well as other services vendors like Infosys Technologies, were hit for a large part of last year by the economic recession.

TCS said that its revenue for the quarter ended March 31 was US$1.7 billion, up by 17.6 percent from the same quarter in the previous year. Profit was up 60 percent to $420 million.

The company has registered revenue growth in all the industry segments in which it operates, said N. Chandrasekaran, the company's CEO and managing director, at a press briefing in Mumbai.

For its fiscal year ended March 31, the company posted revenue of $6.34 billion, up by 5.38 percent from the previous year. Profit was up 29 percent to $1.45 billion.

The results are in accordance with U.S. GAAP (generally accepted accounting principles).

It may be back to business as usual for Indian outsourcers, analysts said. Infosys, the country's second largest outsourcer, also reported earlier this month a growth in profit and revenue in dollar terms for the quarter.

The company said that revenue for the quarter ended March 31 was US$1.3 billion, up 15.6 percent from revenue in the same quarter a year ago. Profit increased by 8.7 percent to $349 million. The company forecast that revenue for its fiscal year ending March 31, 2011 will be in the range of $5.57 billion and $5.67 billion, after year-on-year growth of 16 percent to 18 percent.

Worldwide spending on IT services is expected to reach $821 billion in 2010, up 5.7 percent from 2009, Gartner said earlier this month.

The market for outsourcing has improved, but it is too early to predict a return to the boom time before the recession for Indian outsourcers, said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International (TPI).

Customers are looking at outsourcing options including offshoring, primarily with an eye to cut down costs, Pai said. They haven't started investing in automation and new technologies in a big way for business or revenue growth, he added.

There is also concern that as companies resume large-scale hiring in India, there will be a return to the spiraling salaries before the recession. TCS, for example, added 10,775 new staff in the quarter ended March 31. The company has made offers to 20,000 students in campuses for the fiscal year ending March 31, 2011, and is also planning increments for its staff in India, said Ajoy Mukherjee, TCS' vice president and head of global human resources.

These new staff additions by Indian outsourcers may not however push up salaries in the short term, as there are still students who graduated in 2009 that have not been absorbed by the IT sector, Pai said.

Just as challenging for Indian outsourcers is the appreciation of the Indian rupee against the U.S. dollar and some European currencies. Most of the revenue of Indian outsourcers comes from Europe and the U.S. A strong rupee reduces the money available to Indian outsourcers for spending on staff and facilities offshore in India.

While the rupee appreciated by 2 percent against the dollar in the quarter ended March 31, the appreciation was higher at about 7 percent against some European currencies, said S. Mahalingam, TCS' chief financial officer. The company improved its margins by trimming costs and getting more efficient, he said.

Join the newsletter!

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

Tags hiringit servicesfinancial resultsindian outsourcingTata Consulting 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

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

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

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

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

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?