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TCS continues to drive margins

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CIOL Bureau
New Update

 MUMBAI, INDIA: The appreciation of Indian rupee against the US dollar in 2007 had raised many concerns for countless companies in India and the dip in revenues in the subsequent quarters were a testimony to it.

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Tata Consultancy Services Limited (TCS), one of the biggest software services companies in India announced its results, bringing in a surge of 22 per cent year-on-year in terms of revenues, which now stand at Rs. 5,923 crore.

The Earnings per Share (EPS) for the concluded quarter stood as Rs. 13.56 and Profit after Tax (PAT) is at Rs. 1,327 crore. When compatriot Infosys announced its results last week, the growth in terms of revenues stood at close 17 per cent for the previous quarter. An analyst from Angel Broking Limited pointed out, “The results of TCS show a solid growth based on volume.”

He also pointed that the company has been continuously clocking an 8 per cent growth for many quarters and that to a large extent negated the dollar impact or a possible US economic downturn.

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The year 2007 witnessed TCS grabbing five outsourcing contracts (multi-year deals) which include—$1.2 billion deal from Nielsen Company; $140 million contract from Bharat Sanchar Nigam Limited (BSNL); $140 million covenant with Banco del Pichincha C.A, an Ecuador based entity; a $200 million deal one of the biggest social establishments in Latin America, Mexican Social Security Institute and a contract struck with Bank of China for an undisclosed money.

While speaking on these prized deals, S. Ramadorai, chief executive officer and managing director, TCS stated, “There is growth momentum across geographies with contributions from all business units.” “We are cautiously confident that our geographical footprint, full service offerings and innovative customer engagement models will help us stay on a growth trajectory,” he also opined.

Analysts enthused that the results of TCS are benefited by the larger number of fixed priced deals than its competitors in the industry, bringing higher litheness to mechanize processes and employing fewer individuals to reap greater margins.

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Also, TCS accrues a chunk of its revenues from fixed prized contracts that constitute over 50 per cent of their revenues while the figure is much lesser for its peers. While speaking on the margin front, S Mahalingam, chief financial officer mentioned—“We are delivering growth without compromising on margins even though the Indian rupee appreciated by 12 per cent over the last one year. The company continues to drive margins through rate and productivity efficiencies and keep a strong handle on costs.”

Officials from TCS pointed out that the last quarter saw verticals such as banking and financial services, travel and hospitality, energy and utility growing at an impressive rate. * The largest employer of IT in the country was armed with 108, 229 employees in Q3 and is maintaining a low attrition rate of 12.2 per cent (the lowest in the industry).

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