Mumbai / Bangalore: Tata Consultancy Services Ltd, or TCS, India’s largest software services company, said fourth quarter profit rose 50% to Rs2,001 crore as it won large deals from customers, including the UK government to administer its pension scheme, and benefited from improved staff productivity.
Revenue rose 7.9% to Rs7,738 crore led by growth areas such as banking and financial services, retail and life sciences. “Growth as well as client additions are happening across verticals,” said N. Chandrasekaran, CEO and managing director of TCS. “Our cost structure is intact and margins are at an all-time high since listing.”
TCS, which counts customers such as General Electric Corp. and Citigroup Inc., follows closest rival Infosys Technologies Ltd in showing improved business as Western customers send work offshore to cut costs and remain competitive. Infosys has forecast 16-18% growth in dollar revenue this year. Profit at TCS jumped by the most since the three months through March 2007.
Global analysts have projected a technology rebound as Western companies begin spending on technology for growth, budgets which they slashed during the economic downturn. On 8 April, Forrester Inc. said it expects the US information technology (IT) market to grow by 8.4% to $550 billion (Rs24.53 trillion), and the global IT market by 7.7% to $1.57 trillion. This was followed on 12 April by Gartner Inc., which forecast a 5.3% increase in IT spending to $3.4 trillion in 2010.
Industry lobby group Nasscom has projected software exports to grow by 13-15% in fiscal 2011, as the demand situation improves.
“Large companies are growing higher than this. Now we have to see how the small and medium industry and the captives perform,” said Som Mittal, president of Nasscom. “We are expecting them to do better.”
Analysts say TCS, which reported results after markets closed on Monday, has beaten street expectations.
“The margins performance is good. TCS gets more revenue from BFSI (banking, financial services and insurance) customers than other large companies. The underlying momentum over there is high growth,” said Apurva Shah, head of research at Prabhudas Liladher Pvt. Ltd.
The firm added 10,751 people in the three months to March. It has made 20,000 campus offers this year. As growth returns, TCS will give average 10-13% wage hikes to offshore employees and between 2% and 4% for workers onsite, costing it around $200 million dollars, said Ajoy Mukherjee, head of global human resources for TCS.