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Tata posts strong revenue, profit growth as outsourcing market recovers

Tata posts strong revenue, profit growth as outsourcing market recovers

Other Indian outsourcers are also benefiting from an improvement in the outsourcing market

Tata Consultancy Services reported strong growth in revenue and profit in the fourth quarter, taking advantage of an improvement in key markets for offshore services like the U.S. and Europe.

The revenue of India's largest outsourcer was close to US$3.5 billion in the quarter, up 17 percent from revenue in the same quarter last year under IFRS (International Financial Reporting Standards). Net profit at $858 million was up nearly 32 percent year-on-year.

The revenue growth in rupees was higher, at 32.5 percent, while profit increased by close to 50 percent, primarily because of the weaker Indian rupee against the U.S. dollar.

TCS CEO and Managing Director N Chandrasekaran expects that business in the coming year will be better than in the current fiscal year ending March 31.

"Our pipeline is healthy and our order book is healthy," Chandrasekaran said Thursday in a media briefing. To meet the demand, TCS plans to hire 55,000 staff in the fiscal year, up by 5,000 from earlier plans, he said.

The company added 5,463 net hires in the quarter, taking the total number of staff at the end of the quarter to 290,713.

TCS saw revenue growth in most of its markets abroad in the quarter. The company's revenue might have been higher but for the slackening of business from the Indian market as the country prepares for a general election this year, Chandrasekaran said.

Other Indian outsourcers are also reporting better earnings after being affected by the U.S. recession and European debt crisis for many quarters. Worldwide IT spending is projected to total $3.8 trillion in 2014, up by 3.1 percent from last year, Gartner said this month. IT services spending is expected to rise by 4.5 percent.

Infosys, India's second largest outsourcer, last week reported fourth-quarter revenue of $2.1 billion, up by around 10 percent year-on-year. Profit grew 6.7 percent to $463 million.

HCL Technologies, another large Indian outsourcer, reported Thursday that its fourth quarter revenue had increased 14.5 percent to $1.3 billion, while its profit grew 39 percent to $242 million.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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