Tata Financial Results Hit by Economic Slowdown
Tata Consultancy Services (TCS) became the latest Indian outsourcer to report slower financial growth in the second quarter as a result of the global economic downtown.
India's largest outsourcer reported Wednesday that its revenue for the quarter ended Sept. 30 was US$1.57 billion, up by 14.74 percent from revenue in the same quarter last year. But that was far lower than the 45.2 percent growth the company posted for the same quarter last year.
The company's profit in the quarter was almost stagnant at $287 million up by 3.4 percent from the same quarter last year. TCS executives said that profits did not grow much because the company lost money in currency hedging.
Forrester Research has warned that Indian outsourcing companies could be hit by the crises that began in the U.S. financial sector, particularly companies that derive a large share of their revenue from banking and financial services.
TCS' business from that sector grew in the quarter, despite the economic crisis, although the growth rate was lower than the growth of revenue of the company as a whole, N. Chandrasekaran, chief operating officer of TCS, said Wednesday.
The company said it was pursuing 20 new large deals, including some in the banking and financial services sector.
About 41.9 percent of TCS' revenue in the quarter came from that sector, but the share of this sector in the company's revenue has come down from 43.3 percent in the same quarter last year.
TCS announced earlier this month that it had reached an agreement to acquire Citigroup's interest in Citigroup Global Services, its BPO (business process outsourcing) arm in India, for about $505 million in cash. As part of the deal TCS through Citigroup Global Services will provide $2.5 billion worth of services to Citigroup and its affiliates over the next nine and a half years.
On Wednesday, India's third largest outsourcer Wipro reported a 36 percent growth in revenue for the quarter, but growth in profit was 1.3 percent.
Wipro said it was cautious about the outlook because of the deterioration in the global economy. Two other top Indian outsourcers, Infosys and Satyam, cut their revenue outlooks earlier this month on worries of falling technology spending.
TCS added 5,328 employees in the quarter taking the total as of Sept. 30 to 121,610 staff. The company also said it gained 51 clients in the quarter.