Home / Companies / TCS seeing rebound in Asia-Pacific IT spending

Bangalore: India’s top information technology (IT) firm by sales, Tata Consultancy Services Ltd (TCS) is seeing an increase in corporate technology spending in Asia-Pacific in the current quarter on signs of economic revival, an official said.

Mumbai-based TCS, part of the Tata group that spans commodities, autos and services businesses, earned 4.3% of June quarter revenues of Rs7,207 crore from the Asia-Pacific region, a share it expects to rise.

“I think there is a generally positive view that Asian economies are coming back," Girija Pande, TCS’ head of Asia-Pacific operations outside India, said in an interview on Monday.

“Both global and local companies are investing back in Asia and the IT spend, therefore, is going up," he said. “I can already see green shoots in many countries in Asia where the growth is starting to come back again."

After posting a scorching pace of growth for years, India’s outsourcing sector has been battling a slowdown as top global customers were hit by the financial crisis and economic downturn.

Pande said most of TCS’ clients in Asia-Pacific, where Australia, China, Japan and Singapore are key markets, had cut back on IT spending in the first half of 2009.

“People have started opening their wallets," he said, but cautioned that the recovery in technology spending might not be very robust as some large corporations in the region were still seeing pressure on their businesses.

Japan’s economy emerged from its longest recession in at least 60 years in the second quarter, according to preliminary figures released on Monday.

Indian software services firms such as TCS and second-ranked Infosys Technologies Ltd are expanding in Europe and elsewhere to cut their dependence on the US market, which accounts for at least half the sector’s revenues.

Goldman Sachs, in a report last week, maintained a buy rating on TCS as the company had an “optimal combination of geographic exposure, verticals and services" to benefit from a potential economic recovery.

The Indian firms face competition from big global players such as International Business Machines Inc., Hewlett-Packard Co., and Accenture Ltd that are looking for growth in markets such as Asia-Pacific and Latin America.

Pande said TCS was seeing a “healthy pipeline" of outsourcing contracts in countries such as Australia, China and Singapore, and most of them were worth $10-$30 million (Rs48.7-146.1 crore). He declined to elaborate.

TCS, which provides services such as consulting, system integration and manages call centres, had not seen any outsourcing deal cancellations in Asia-Pacific because of the economic turmoil, though some projects were delayed, he said. Pande said the company was on track to raise its headcount in China to 5,000 people in the next five years, up from more than 1,000 now in Tianjin, Beijing, Shanghai and Hangzhou.

TCS last month beat expectations by posting a 22% rise in quarterly profit, but said the environment remained weak and there was pressure on fees.

Shares in TCS, whose clients include Citigroup Inc., General Electric Co., Lloyds TSB, and Singapore Airlines, fell 1.9% to Rs510.70, smaller than a 4.1% drop in the main market.

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