TCS hints at price hike, sees growth across geographies

There has been 2-3 per cent increase in prices in some deals signed over the last few months

PTI | July 19, 2011



There are 1233 users.Software giant TCS on Monday said it may see a rise in deal prices, giving better returns to the company, and exuded confidence that it would grow across geographies including the US and Europe.

"Pricing situation is very stable. If demand continues to be where it is...I think the prices (of deals) should go up," TCS CEO and MD N Chandrasekaran told reporters in the Capital. He added that there has been 2-3 per cent increase in prices in some deals signed over the last few months.

"Whenever renewal or new deals will come, we will look for price increase because there is cost increase," he said, but declined to comment on the timeline or by how much the pricing could go up. Chandrasekaran was confident that the company will be able to maintain the growth momentum, even as the European debt crisis and high unemployment in the US are concerns that the USD 60 billion Indian IT industry is facing.

"We think the environment is good in spite of the macro economic uncertainty in different parts of the world. Some of the countries are failing in Europe and there is the issue of unemployment in the US, but still I think customers are going with their plans as they had originally intended," he said.

As long as the company is able to work with customers and stay close to them, "we will be able to deliver a good growth, capture the growth and make a difference", he added. TCS business in Europe has seen double-digit growth, and other markets have also witnessed a strong momentum, Chandrasekaran said.

Indian IT majors get as much as 80 per cent of their revenues from the US and European regions. "I don't have any negative view from clients. Things are going as per plan. The customers are on track with their programmes. This time around, people understand the macroeconomic situation, so any plans that they have today is fully understanding the situation," he said. Chandrasekaran explained that during the last economic crisis people were caught unaware and companies could not react immediately to the situation.

"This time people understand the macroeconomic situation, so any plans that they have today is fully understanding the situation," he said. Chandrasekaran said he expects to see good growth in near term from European market as well. "Europe has been good for us...We don't have significance presence in Italy and Greece. In near term Europe looks good for us," he added. 

On the issue of rising visa rejections by the US, he said the company is working on alternatives like increasing local hiring and planning visas much in advance, to counter the impact. "Visa rejections have gone up...The whole visa issue is becoming serious and we need to see how we are going to execute a plan... Be it increasing local recruitment, planning visas much in advance, there are many things that can be done," Chandrasekaran said.

He added, however, the issue would not hurt its revenue growth. Chandrasekaran said the company has improved its operating margins by 600 basis from recession period till date. "What we have today is all time high, from pre-recession till now," Chandrasekaran added. However, one of his concerns was the high level of attrition. In the last quarter, TCS reported attrition rate of 14.8 per cent, which he said should ideally be about 12 per cent. TCS has announced it would hire 17,000-20,000 in the July-September quarter, while the overall hiring for FY'12 would be about 60,000.

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