Tata Consultancy's profit increases by 47 percent on outsourcing contracts

Tata Consultancy Services Ltd., India's top software exporter, declared its profit in the January-March period rose 47.4 percent from a year ago, owing to outsourcing contracts.

Photo: Tata Consultancy's profit increases by 47 percent on outsourcing contracts

Mumbai-based TCS said it won 12 outsourcing contracts valued at more than US$50 million (38 million EUR) each during the financial year that ended in March.

"The significant number of large wins ... that will ramp up during the next fiscal year makes us confident of continuing sustained, profitable growth," Chief Executive S. Ramadorai said in a statement on Monday.

Net profit rose to US$270 million (207 million EUR) in the January-March period compared with US$183 million in the same quarter a year ago, the statement said.

Revenues rose 38.2 percent to US$1.2 billion (920 million EUR) during the quarter, taking annual revenues to US$4.3 billion (3.3 billion EUR), it said.

The earnings numbers, which conform to U.S. accounting standards, were largely in line with expectations. The company didn't give any guidance for future revenues and profits.

Chief Financial Officer S. Mahalingam told reporters the company is pursuing at least 10 deals valued at more than US$50 million each.

Each TCS share earned about US$0.97 in the financial year, said the statement, which came after the close of trading Monday.

Scores of Western companies routinely hire Indian firms to handle software development, back-office operations, and other work such as managing information technology infrastructure. Outsourcing these tasks helps save costs as wages are low in India and skilled workers are easily available.

TCS said it added 43 new clients during the January-March quarter, taking its total number to 218. It also hired 5,827 new employees during the quarter.

In recent years, Indian companies have increasingly looked to new markets in South America, Europe and China in a bid to hedge against a possible slowdown in the United States, which has so far been the largest source of outsourcing orders.

TCS said it ramped up its centers in Brazil, Mexico and China, and sales in South America doubled last year.

Still, about half of its revenue in the financial year 2006-07 came from the United States, while about a quarter came from Europe.