Hyderabad: The country’s largest software services provider, Tata Consultancy Services Ltd (TCS), expects strong growth in the US will help offset the impact of any disruption caused by political unrest elsewhere.
The recovery of the US from the global economic downturn of 2008-09 is faster than that of Europe, N. Chandrasekaran, chief executive and managing director of TCS, said in Hyderabad on Tuesday at the World Wide Web conference.
Parts of Europe are facing a debt crisis, West Asia and North Africa are in turmoil because of mass pro-democracy protests and Japan is reeling under the impact of the 11 March earthquake and tsunami.
“Growth in continental Europe is very important for the company but from an economic recovery point of view, the US market is more positive,” Chandrasekaran said.
“Europe is lagging behind, though it is equal in priority.”
Europe accounts for about 27% of TCS’ revenue, while the US contributes about 55%. The company’s margins have improved over the past six-seven quarters in a row by at least 500 basis points, he said, adding these were its best ever. “The question is whether we can sustain it,” he said.
TCS’ growth rate is expected to outpace the industry average.
“It has generally been positive growth for the sector,” said Harith Shah of Angel Broking.
“Nasscom (the industry lobby group) has predicted a growth of 16-18% for the industry but TCS being the largest player in the country’s IT (information technology) sector, we expect its growth to be around 22-25%.”
Japan’s disaster has had a “small impact” on TCS, Chandrasekaran said. “There will be some impact but it is very small even in this quarter, even couple of quarters going forward.”
TCS increased prices in the financial fourth quarter as demand for information technology services picked up in segments such as retail and banking, financial services and insurance, Chandrasekaran said.
“We are going to see this in FY12 also,” he added, without giving specific numbers.