TCS Q2 net up 52%

By : |October 12, 2004 0

MUMBAI: Tata Consultancy Services (TCS) Ltd., said its second-quarter profit rose 52 percent, beating market estimates, as companies worldwide increased outsourcing.

It was TCS’s first earnings report since the company, General Electric’s largest offshore IT services supplier, raised $1.2 billion in August in India’s largest-ever-initial public offering.

TCS, part of the diversified Tata group, India’s second-largest industrial conglomerate, said its July-September profit rose to Rs 576 crore, excluding an Rs 187 crore one-time charge for employee compensation. Revenue rose to 44 percent to Rs 2,430 crore.

A Reuters poll of 15 analysts had forecast the firm would post a profit of Rs 530 crore on revenue of Rs 2,298 crore rupees, according to U.S. accounting standards.

TCS said it added 52 clients during the quarter and hired net 3,974 employees, taking its total headcount to nearly 41,000.

The share of revenue from GE fell to 15.9 percent in the second quarter from 17.1 percent in the first quarter, TCS said.

“GE’s contribution to revenue coming down augurs well in the long run,” said R. Ravi, analyst with IDBI Capital Markets, adding that the addition of 52 clients was a very positive sign.

“It shows business is picking up, but it is important to see whether the new customers are coming in at better rates,” he said.

Software companies have reported stable billing rates in recent quarters and Infosys said it was adding new clients at slightly higher billing rates than for existing clients.

TCS, Infosys and third-ranked Wipro Ltd. compete for business from U.S. and European clients, which are outsourcing back-office and other services to India to take advantage of wages that are typically a fifth of the U.S. level.

The industry’s exports of $12.5 billion are seen soaring to $50 billion by 2009.

But Indian players face increased competition from multinationals such as IBM and EDS as they ramp up their Indian operations.

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