Tata, HCL benefit from a growth in offshoring

The Indian outsourcers report strong revenue and profit growth for the quarter ended March 31

Indian outsourcers Tata Consultancy Services (TCS), and HCL Technologies reported this week strong revenue and profit growth for the quarter ended March 31, as outsourcing by clients to offshore locations picked up.

TCS, the largest Indian outsourcer, said on Thursday that its revenue in the quarter was US$2.2 billion, up by 33 percent from the same quarter last year. Net profit was $531 million, a growth of 25.4 percent over last year.

For the fiscal year ended March 31, TCS said revenue had grown by 29 percent to $8.2 billion, and net profits grew by 31 percent to $1.9 billion.

The company added 11,700 staff in the quarter, taking the total to 198,614 as of March 31.

The macroeconomic conditions remain uncertain because of various crises including in the Middle East and Japan, but TCS is getting positive signals from clients, N. Chandrasekaran, the company’s CEO and managing director, said at a press conference in Mumbai that was webcast.

Although IT budgets are flat, Indian outsourcers have benefited as customers seek to maximize their fiscal resources by moving work offshore, said Jimit Arora, research director at Everest Group. The market is healthy and growing, and there is enough demand for offshoring that will drive growth for tier-one players, he added.

HCL Technologies, another large Indian outsourcer, reported on Wednesday revenue of $915 million, up 33.5 percent from the same quarter last year. The company said that net profit had reached $103 million, up 35 percent from the same quarter last year.

The market is still in a post-recession phase: spending on IT is still flat, and there are fewer large orders, Vineet Nayar, the company’s vice chairman and CEO, told reporters in a conference call.

Infosys Technologies, India’s second largest outsourcer, disappointed investors and analysts by reporting revenue growth of about 23.6 percent and net profit growth of 18.9 percent for the quarter.

The company’s risk aversion and an impending management succession may slow down the company in comparison to its competitors, analysts said. Two key executives of the company, who were also board members, announced their resignations from the company. Infosys said the January-March quarter has been traditionally soft in comparison to earlier quarters.

As the offshore business booms, problems such as staff attrition and growing staff costs have returned.

While it is still easy to hire staff from the ranks of new graduates, there is strong competition for experienced talent, HCL’s Nayar said. The company tends to hire more experienced people, as customers prefer to deal with seasoned staff, and projects get completed on time, he added.

HCL’s margins may drop in the July-September quarter when it plans to have a round of wage hikes, Nayar said.

TCS plans to increase salaries by 12 to 14 percent for its staff in India, Ajoy Mukherjee, the company’s head of global human resources, said.

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

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags outsourcingbusiness issuesservicesfinancial resultsoffshoringHCL TechnologiesInfosys TechnologiesTata Consultancy ServicesEverest Group

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

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?