India's Tata posts strong revenue, profit growth

Indian outsourcer Tata posts strong revenue and profit growth, as India continues to be a favorite for offshore contracts.

Tata Consultancy Services (TCS), India's largest outsourcer, has reported strong revenue and profit growth for the quarter that ended December 31. It was driven by new client wins and a ramp up in business from existing customers.

Revenue for the quarter was Indian Rupees 48.6 billion ($US1.1 billion at the exchange rate on the closing day of the quarter) up 40.8 per cent over revenue in the same quarter in the previous year. The company's profits grew in the quarter by 47.25 per cent to Rupees 11.0 billion in the same quarter in the previous year.

Despite the appreciation of the Rupee over major currencies, TCS was able to increase its revenue because of larger volumes of business, new services, and higher prices, the company's CFO, S. Mahalingam, said. The company's margins had also improved because of higher pricing, cost cutting and improved productivity, and a shift of more work offshore to India.

The results are based on US generally accepted accounting principles (GAAP), and refer to the third quarter of TCS' fiscal year which runs to March 31.

TCS, based in Mumbai, added 5562 employees during the quarter, taking the total number of staff to 83,500, with employees from 60 different nationalities.

Indian outsourcing companies are competing for staff with Indian subsidiaries of multinational services companies such as IBM and Accenture, which are expanding in the country. TCS' staff attrition rate in the quarter was 10.8 per cent, up from 8.7 per cent in the same quarter of the previous year. TCS has adopted a number of strategies to increase staff availability, including increasing the number of people hired out of college rather than those who work for other companies, and hiring science graduates besides engineers.

TCS has set up operations in China, Eastern Europe and Latin America both for proximity to customers and to take advantage of talent pools outside India. More than 90 per cent of its staff was still from India at the end of the quarter. The company added 55 new clients during the quarter, including five new deals of more than $US50 million each.

Indian outsourcing companies continue to ride a boom in outsourcing. India's second largest outsourcer, Infosys Technologies, reported last week that revenue for the quarter that ended December 31 was $US821 million, up 46.9 per cent from revenue of $US559 million in the same quarter of the previous year. The company's profits also grew by 52 per cent to $US218 million from $US143 million.