TCS billing rates up, no subprime hit

TCS billing rates up, no subprime hit

Bangalore: Top software services exporter of the country, Tata Consultancy Services Ltd , does not expect the US subprime crisis to dent deals and it has been able to raise its billing rates for customers, a top executive said.

Chief Operating Officer, N. Chandrasekaran said the company, which gets more than half of its revenue from the United States, had raised billing rates by 3-4% from existing contracts and by more than 5% for new deals.

“We would continue to monitor the fallout of subprime very closely. Having said that we don’t see any impact," he told reporters on 7 September, adding the company’s exposure to the mortgage sector was negligible.

Chandrasekaran, who was promoted to the new position on Thursday, said the outlook for deals was good and offshoring would continue even if there was a slowdown in the US economy.

“The financial services business is healthy, especially the US-based financial services firms, and they are on a growth curve," he said.

Still, the turmoil in the US subprime mortgage sector that threatens to impact the world’s largest economy is a concern for Indian software and services companies, which get more than half of their revenue from the United States.

Last month, India-based outsourcing firm WNS (Holdings) Ltd lowered its fiscal 2008 outlook as work stopped coming from its client US mortgage lender First Magnus Financial.

Bangalore-based iGate Global Solutions Ltd, a mid-sized outsourcer, has seen its income from US mortgage companies drop to 7% of its revenue in the three months to June from more than 10% in the December quarter.

TCS plans to set up a third software services facility in China by end-March and raise the staff strength there to 5,000 by 2010 from about 1,000 now. The Mumbai-based company’s existing facilities are located in Beijing and Hang Zhou. It has partnered with local firms for its joint venture in China, in which Microsoft Corp is likely to buy a 10 percent stake soon, Chandrasekaran said.

Tata Consultany’s smaller rivals Infosys Technologies Ltd, Wipro Ltd and Satyam Computer Services Ltd have also opened shops in China over the last two years, lured by cheaper costs and big business potential.

Chandrasekaran said Tata Consultancy was eyeing outsourcing deals from local Chinese companies as well as large foreign firms that have operations in the world’s fourth-largest economy.