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TCS quarterly profit rises 15 percent to $652M
Monday - 1/14/2013, 8:16am EST
By ERIKA KINETZ
AP Business Writer
MUMBAI, India (AP) - Tata Consultancy Services' profits rose 15 percent in dollar terms to $652 million in the October-December quarter as global clients continued to cut costs by sending work offshore, the company said Monday.
India's top outsourcer said revenues in the three months rose 14 percent from a year earlier in dollar terms to $2.9 billion.
Analysts polled by FactSet had forecast profit of $623 million on sales of $2.9 billion.
"We've been able to deliver a well-rounded performance across the board," said chief executive Natarajan Chandrasekaran. "We look very confident as we go into the future."
TCS joins rival Infosys in reporting better-than-expected earnings, raising hopes of a revival in tech spending.
The positive surprise came despite a slump in business from continental Europe for TCS. The company also said more of its clients sent their employees on longer furloughs this year to cut costs at year's end.
Chandrasekaran dismissed the 2.5 percent fall in Europe business from the prior quarter as a "one-off" event, coming after a period of strong growth. "We expect Europe to do well next year," he said.
Chandrasekaran said that in the last few years of global economic turmoil, manufacturing and high-tech clients have been sending employees on 7 to 10 day furloughs in December to keep costs in line and meet their annual budgets. This year, he said, some financial services clients also sent their employees on furlough.
"This year it was a little more than what we usually see in terms of the length, in terms of the number of companies," he said.
"The volume growth was subdued due to furloughs," said Dipen Shah, head of private client group research at Kotak Securities. "However, we expect growth rates to pick up, going ahead."
TCS said it added 31 new clients during the quarter, bringing the number of $100 million-plus clients from 14 to 16. The company added 9,561 employees, net, during the quarter, as strong growth in Britain and the U.S., as well as in Latin America and India, more than compensated for the drag in continental Europe.
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