Bangalore: The weakening euro and sterling currencies are likely to hit revenue and margins at Tata Consultancy Services Ltd, India’s top software exporter, its chief executive said on Friday.
A global economy on the mend, recent deal wins and stable fees have brightened the outlook for export-driven Indian IT firms such as Tata Consultancy and rival Infosys Technologies, after the recession hit the sector.
But debt crisis in euro zone and a sliding euro are worries for India’s $60 billion outsourcing sector that counts Europe as their second-biggest market after the United States.
“Both the euro and sterling are significantly weakening and the rupee is appreciating and that will definitely have an impact on our revenue line,” said Tata Consultancy Services CEO N Chandrasekaran.
“This will affect operating margins also. It’s a headwind which we will have to overcome,” he said.
Tata Consultancy, which provides services such as consulting, systems integration and back-office outsourcing, posted a 47% rise in March quarter net profit, beating street estimates.
“We are seeing a mixed bag of deals. We are seeing deals happening in the US and emerging markets. Deals in Europe will be slow,” Chandrasekaran said.
Tata Consultancy has given an average of 10% wage hikes from 1 April, which will have an additional cost of $194 million, he said. The company had added 10,110 staff in the March quarter.
Shares in Tata Consultancy, part of the Tata Group that spans the commodities, autos and services businesses, ended 1.2% higher at Rs749.50 in the main Mumbai market that rose 1.2%.