US slowdown affects India's Tata

India's largest outsourcer, Tata Consultancy Services (TCS), reported Monday that revenue and profit increased more slowly for the year ending March 31 than it did for the prior year, signaling that it was affected by economic uncertainty in the U.S.

The U.S. is the largest market for most Indian outsourcers. Indian outsourcers Infosys Technologies and Wipro last week also reported a drop in revenue and profit growth for the year.

Last year, TCS revenue was up 41 percent and profits were up 43 percent. This year, TCS revenue increased by 33 percent, to US$5.7 billion, while profit rose by 32 percent, to $1.25 billion. TCS added 212 new customers during the year, and added 22,116 staff to take the total number as of March 31 to 111,407.

North America accounted for 50.7 percent of revenue while the U.K. accounted for 19.8 percent.

Uncertainty about the economic environment led customers in the U.S. to slow down on new deals with outsourcers in the first calendar quarter of this year, said Siddharth Pai, a partner at sourcing consultancy firm, Technology Partners International Inc (TPI) in Houston, Texas.

During the quarter, TCS' revenue, at $1.52 billion, was 1 percent higher than in the previous quarter, while profit dipped by 7.25 percent.

In the medium and long term, a recession in the U.S. will lead to more business going offshore to countries like India, Pai said. Already the value and number of new offshore contracts is on the upswing, he added.

The IDG News Service is a Network World affiliate.