India’s biggest IT services firm is still firmly on the growth curve, reporting a double-digit rise in revenue for its latest financial quarter.
Tata Consultancy Services booked sales worth almost $4bn ($3.93bn) for its third financial quarter, which ended 31 December. This was 14.3% higher than the same period 12 months earlier. The company’s profit in the three-month period was $873m, which was a 4.4% increase.
Despite recent speculation, strongly denied by TCS, that the company is downsizing its workforce, it actually added 16,561 staff in the third quarter, taking the total to over 318,000.
TCS CEO N Chandrasekaran said the company had maintained momentum in a traditionally weak quarter for the IT industry.
He said he expected the full-year results to be strong. ‘In areas like digital, simplification and governance, we continue to partner closely with customers to help them prepare their businesses to succeed in an economy where the default is digital.”
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The strength of offshore companies such as TCS is giving CIOs real choice and a good bargaining position when they talk to their existing suppliers
According to management consultancy Value Leadership Group CEO Peter Schumacher, IBM is losing ground to offshore-based firms.
He added that TCS is the main challenger to IBM Global Services.
According to Schumaker, TCS is now on the list of every European corporate that buys IT services. “In Europe, TCS will add almost $1bn in new business in 2014, which underlines the enormous market momentum and customer confidence they now enjoy,” he said.
Outsourcing lawyer Mark Lewis at Berwin Leighton Paisner recently told Computer Weekly that TCS’s strong growth is likely to continue. “It is achieving both linear and non-linear growth. It is still recruiting heavily in India and is building its global workforce at the same time.”
In the UK, India-based IT services firms increased their share of the total contract value of private sector IT and BPO contracts from 4% to 25% between 2005 and 2010 at the expense of large US-based service providers, according to research.
A study carried out by Internet Services Group (ISG) revealed that Indian suppliers accounted for 4% of spending in the period between 2002 and 2005; 15% between 2006 and 2009; and a substantial 25% since 2010.
During the same periods, US suppliers have seen the share of total contract value fall from 41% between 2002 and 2005, when they enjoyed their largest share; to 38% between 2006 and 2009; and to 24% since 2010.