Mumbai: Tata Consultancy Services (TCS) is focusing on emerging markets and on sectors besides financial services to help offset a softness in the U.S. economy that could hurt outsourcing deals, its chief executive said on 22 April.
TCS, India’s top software exporter, on 21 April posted a lower-than-expected rise in quarterly profit, which pulled its shares down as much as 10.5% to Rs888 in a firmer market.
Like its peers, TCS gets the bulk of its revenue from banks and financial firms, sectors which have been battered by the turmoil in global financial markets.
“We are increasing focus on diversifying the revenue base,” S. Ramadorai told Reuters, naming sectors such as energy and utilities, lifesciences and pharma, manufacturing, aerospace, auto and retail.
“We’re also focused on international growth outside the United States, which are growing faster than the U.S. market.”
TCS, which got half its revenue from the United States in the March quarter, said its new growth markets - Asia Pacific, India, Latin America, the Middle East and Africa - grew by over 40% in 2007/08, crossing $1 billion in revenues.
That compared with more than $1 billion coming from the UK market and $500 million from Europe of a total of $5.7 billion.
“While these markets were growing quickly, they still didn’t have the scale of the U.S. market, which would continue to contribute the biggest share of revenue,” Chief Operating Officer N. Chandrasekaran said.
“There’s still a lot of opportunity in the U.S. Its share will come down over the next five years as the other markets grow,” he added.
“Can we do $5 billion in the new growth markets alone? Sure. There’s a lot of upside there, but can we do a $1 billion deal in India now? It will happen, but it will take time.”