Tata beats rival Infosys in revenue, profit growth

IDG News Service - Tata Consultancy Services on Friday reported strong revenue and profit growth in the third quarter, citing a pick-up in discretionary spending by customers.

Revenue in the quarter for India's largest outsourcer was $2.85 billion, up by 13% from the same quarter last year, while net income at $643 million was up almost 22%, in a financial report complying with IFRS (international financial reporting standards).

In contrast, Infosys, the country's second largest outsourcer, had a more pessimistic outlook and blamed continued uncertainty in spending when it reported last week that its revenue for the quarter was $1.8 billion, up only 2.9% from a year ago. Net income was $431 million, up 4.9% from a year earlier.

Companies are responding differently to the challenging environment, said Sudin Apte, principal analyst and CEO of Offshore Insights in Pune. TCS has invested in domain expertise, account management and in new technologies like cloud and mobile, while Infosys has been slower in execution, he added.

TCS saw growth across all its key markets like North America, U.K and Europe, and across industries, said N. Chandrasekaran, CEO and managing director at a press briefing in Mumbai on Friday.

Business volumes were up 5% driven by the company's new service offerings, Chandrasekaran said.

TCS' revenue growth is good given the current business environment but far lower than the growth it has reported in the past, Apte said. In the third quarter of last year, for example, revenue grew by a whopping 26%.

The market for Indian outsourcers continues to be slow, though an improvement is expected in the next six months, Apte said.

TCS added 10,531 net new employees in the quarter, taking the total number of staff at the end of the quarter to 254,076. It had 41 new clients in the quarter.

North America accounted for 52.8% of revenue while Europe's share of revenue was 27%.

A sharp depreciation of the rupee against the U.S. dollar boosted revenue growth in rupee terms by 34% in the quarter from a year ago, while net profit was up 44%.

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