Tata revenue, profit up on strong outsourcing demand

The Indian outsourcer expects to do better in the current fiscal year

India's largest outsourcer, Tata Consultancy Services, is boosting hiring and offering wage hikes after reporting strong revenue and profit growth in its recently concluded fiscal year.

The current fiscal year will be better than the previous one as the company expects to benefit from higher client spending in key markets such as financial services and retail, and to meet regulatory requirements, TCS CEO and Managing Director N Chandrasekaran told reporters Wednesday.

The company saw growth across all its key markets, including Europe, Asia Pacific and the U.S., although the Indian market was "soft" as deals could not be closed ahead of federal elections, which began this month, Chandrasekaran said.

TCS' revenue in the fiscal year, ended March 31, was US$13.4 billion up by over 16 percent from the previous year, while net profit grew almost 23 percent to $3.1 billion in accordance with IFRS (International Financial Reporting Standards).

In the fourth quarter, the company had revenue of $3.5 billion, a year-over-year increase of 15 percent. Net profit was $861 million, up by 33 percent from the same quarter last year.

However, India's second largest outsourcer, Infosys, didn't fare as well. It said Tuesday it had a disappointing quarter with a slowdown in some market segments.

Market intelligence firm Information Services Group said earlier this month that the global outsourcing industry is "off to a fast start" in 2014. The ISG Outsourcing Index, which measures commercial outsourcing contracts with an annual contract value of $5 million or more, showed that 10 large contracts worth more than $100 million in ACV were signed in the first quarter. The large contracts, coupled with double-digit growth in overall contracting levels, led to a 14 percent increase in ACV over the first quarter last year, ISG said.

Besides growing its business, TCS has also kept its staff attrition low, which is key in the Indian IT services industry. Staff attrition was 11.3 percent and the company added 9,751 employees during the quarter, taking the total to 300,464.

The company plans to hire 55,000 employees this year of which 25,000 will be recruited at universities and colleges, TCS' head of global human resources Ajoy Mukherjee said. The company will be offering raises to its staff ranging from 2 to 4 percent in developed markets to around 10 percent in India.

North America is the largest market for TCS, accounting for 53 percent of revenue in the year, with the U.K. contributing 17.5 percent.

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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