TCS eyes fast sales growth in Europe

CIOL Bureau
New Update

HELSINKI, FINLAND: India's top IT services provider Tata Consultancy Services expects to see fast sales growth in its European operations as it expands into new countries, while it benefits from its cheaper cost base.


"We are growing 20-25 percent on annual basis - we expect similar level (growth) also in headcount," TCS's European chief A S Lakshminarayanan told Reuters in an interview, adding he expects sales growth to continue at least on that level.

TCS European business sales were at $1.68 billion in fiscal year ending in March 2010, making it the second-largest region for the group after the United States.

Most of its European revenues have so far come from Britain, but Lakshminarayanan said the company is seeking to expand its business in countries were its presence has so far been relatively smaller -- including Nordics.


Last week, TCS said it expected robust demand for outsourcing as it posted a quarterly profit that beat expectations but flagged volatile currencies as a risk to the sector.

TCS competes with Infosys Technologies and Wipro, among others, in India.

Lakshminarayanan said TCS has around 18,000 people in low-cost countries, mostly in India, supporting at any time the 6,000 staff on the ground in Europe.


This gives the company a significant cost advantage over its European-based rivals, most of whom have at best around 20 percent of staff in low-cost countries.

Even the European front-runners in cost cuts, like Tieto -- who have been hit directly by Indian rivalry for its global telecom gear clients like Nokia and Ericsson -- have less than 40 percent of staff in emerging countries.

Many market followers expect the European IT ervices market to be hit next year by governments cutting their spending across Europe to balance budget deficits, but Lakshminarayanan said he still expects to see the market growing.


"I think it's going to be at least one to two percent," he said, adding public sector cuts would have a minor impact on TCS, whose exposure to the sector is tiny in Europe.

Lakshminarayanan said TCS -- part of the Tata Group that spans commodities, autos and services -- has not been active buying up smaller rivals in the past, but he would not rule out acquisitions going forward.

"Our strategy is primarily based on organic growth. We have a capability to acquire, but it's a question of fit," he said, adding the firm would not seek to buy revenue streams, but was more interested in strong access to clients