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TCS gears up for next big leap

moneycontrol.com
Oct 17, 2006 at 01:20pm IST

Mumbai: Tata Consultancy Services has come out with Q2 numbers that have beat Street expectations. The company's net profit was up 14.95 per cent from Rs 862.6 crore to Rs 991.5 crore, quarter-on-quarter, QoQ.

In response to these figures put out, the management of TCS discusses the company’s future outlook and guidance going forward. S Ramadorai, MD and CEO of the company says there are a number of deals in the pipeline, which will be closed soon.

The company’s CFO, S Mahalingam says that TCS will continue to look at a revenue shift for higher margins. The management also says that they have managed to grow more clients across portfolios, and that they are confident of bagging big deals without compromising margins.

BIG LEAP: S Ramadorai, MD and CEO of the company says there are a number of deals in the pipeline.

An important factor that S Ramadorai wished to communicate is the growth momentum. "Growth with profitability is very fundamental to us so we will focus again on operating efficiency, offshore leveraging and growth. There are number of deals in the pipeline that we plan to close."

N Chandrasekaran, Head of Sales and Operations says that the deal pipeline is quite strong across geographies. Out of the USD 50 million plus deals, he says that they are currently negotiating five deals. "Also, we have a healthy pipeline of a few $100 million deals and 5-10 $50 million deals on top of that. So I think the environment on the demand side is pretty robust," he adds.

These deals are from sectors across the board. However, Chandrasekaran specifies BFSI (banking, financial services and insurance), retail and pharma, and adds that there are also some deals going on in utilities and other sectors.

VP & Head of Banking Practice, NG Subramanium further discusses these contracts from a pricing perspective. He says, "For large contracts that are upcoming in terms of system integration or asset leverage solutions, we see tremendous amount of traction anywhere between 5-10 per cent."

When quizzed about the company’s top 20 client contracts renewals over the next six months, Chandrasekaran says that they have negotiated atleast two contracts, however the statistics cannot be disclosed.

He further goes on to say that these contracts are usually of three-year duration and every three-year they come up for renewal. "They are spread out and therefore never come together for renewal, and so some contract or the other comes in every one or two quarters," he adds.

From a human resource perspective, S Padmanabhan Global Head, HR, says that in the current quarter the company added over 8,900 employees, of which 3,600 were from the campuses, 4,200 were experienced professionals from the market, and close to 1000 people from outside India.

"This is the overall recruitment numbers and for the next two quarters, and we want to add another 15,000 gross. This is in line with our overall plan for the year," he says.

On the debate of the effect on the US economic slowdown on tech companies, Ramadorai says that TCS’s global footprint it is not exposure to one country alone but to many others, including Asia Pacific, Europe, UK, Latin America, US and Canada.

When asked about inorganic growth going forward, Ramadorai said their focus is on growth and operating margins. "We will just single-mindedly focus on growth and operating margins. If there is an opportunity, which enhances it, that is when we look at it, not otherwise."

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