TCS bullish on BPO

Q1 net beats estimates at Rs 1,906 cr

PTI | July 16, 2010



Tata Consultancy Services, which today reported a better-than-expected 24.25 per cent jump in its June quarter profit at Rs 1,906.07 crore, said it is eyeing a strong demand for outsourcing services and is chasing 15 large deals across the globe.

"In the first quarter we've already signed 10 big deals.

And now we are looking forward for another 15 large deals in various sectors across the globe," TCS chief executive and managing director N Chandrasekaran told newsmen here after announcing the first quarter earnings. The company had a net profit of Rs 1,533.94 crore in the June 2009 quarter.

Total revenue rose 14 per cent to Rs 8,217.28 crore in Q1 up from Rs 7,206.99 crore in the year-ago period."Our balanced growth was driven by disciplined execution and strong demand across markets and industry sectors. Our holistic growth across service lines highlights the growing traction among firms for our full service strategy," Chandrasekaran said.

Reacting to the results, IIFL research analyst Rajiv Mehta told PTI, "TCS reported numbers significantly ahead of our expectations.It posted a strong operational performance with 8 percent volume growth and marginal decline in operating margins. The growth is broad-based with all verticals and services growing in constant currency. Its revenue visibility has been boosted by multiple large deals wins in the quarter and the pipeline is also strong. We expect TCS to outperform in the near-term."

In terms of service lines, Chandrasekaran said, there is balanced growth across IT, retail, telecom, BFSI and other new service lines like BPO, infrastructure services and assurance.

"In terms of markets, North America, the US, Asia Pacific, Australia led the momentum for growth, an all other markets, including India, grew in constant currency terms," he said.

However, TCS has been alert about the changing macro dynamics in many markets. "We are carefully watching the changing macrodynamic environment in many markets. But our customer-centric business model is very relevant and helps us participating in the ongoing recovery," he said.

Utilisation of HR in Q1 stood at 82.6 percent (excluding trainees) and 74.8 percent (including trainees). The overall attrition rate during this quarter stood at 13.1 percent.

At the end of Q1 the total employee strength stood at 163,7000. "Given the strong deal momentum and continuing ramp ups, we have decided to increase the hiring target for the current fiscal to 40,000, an increase of 10,000 from the previous estimate," global HR head Ajoy Mukherjee said, adding "there are strategic exits. Our focus would be on retention, which is critical. This would be our top priority."

On price negotiations, Chandrasekaran said, "the growth momentum has picked up. Currently pricing is stable, rather there is an opportunity to price increase in the near future."

TCS won a multi-year contract with Europe-based global mobile service provider in Q1. It also became a strategic partner to a large media company to help transform IT operations in a worth over USD 100 million. Among others, it also won a development project in supply chain and merchandising from a large British food retailer.

TCS has over 1,60,000 trained IT consultants in 42 countries.

 

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