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Tata Consultancy Services (TCS) (TCS.NS), India's top software exporter, met estimates with a 23 percent rise in quarterly profit and said it expects companies to continue to spend on outsourcing to boost growth in an uncertain global economy.
The company expects pricing for its services to remain stable in this fiscal year to March despite the debt crisis in Europe, its second-biggest market after the United States.
The outlook for India's $76 billion software services sector has been clouded by worries over potential cuts in technology spending by global corporations in the near term due to concerns regarding Europe.
"All the macro concerns remain for Europe but based on the data points we have, we don't see any reason why growth will slow down from current levels," said TCS Chief Executive N. Chandrasekaran.
"On the ground, from our point of view, things seem to be going well. We continue to close deals, we continue to ramp up, things are looking okay," he told reporters after the company announced its results.
Infosys, India's No.2 software services exporter, last week reported a 33 percent rise in its third-quarter profit, but cut its forecast for full-year dollar revenue growth, sending its shares lower.
"There was a knee-jerk reaction in the market after Infosys' results," Dhiraj Sachdev, a senior fund manager at HSBC Global Asset Management (India) Private Ltd, which owns shares of top information technology companies in its portfolio.
Unless there is fundamental change in the outsourcing model itself, "people will continue to remain overweight" on companies such as TCS, he said.
TCS' smaller rival HCL Technologies Ltd (HCLT.NS) earlier on Tuesday posted a 43 percent jump in December-quarter profit, and said the company is looking to grab a slice of $47 billion worth of global contracts up for renewal in 2012.
TCS, a unit of the salt-to-steel conglomerate Tata Group, said consolidated net profit rose to 28.87 billion rupees ($569 million) in the fiscal third quarter that ended December 31 from 23.46 billion rupees a year earlier.
That compares with an average forecast of 28.9 billion rupees in a Reuters poll.
WEAKER RUPEE HELPS MARGINS
The Indian rupee's depreciation against the U.S. dollar during the December quarter added 282 basis points to TCS' margins over the previous quarter, its Chief Financial Officer S. Mahalingam said.
The rupee was the worst performer among Asian currencies in 2011, losing nearly 16 percent against the dollar.
The average prices that it charges its clients for providing
technology services rose 1.98 percent over the previous quarter, Mahalingam said.
The company added 40 new clients and 11,981 net staff in the December quarter. For this fiscal year, TCS is likely to exceed its target of gross additions of 60,000 recruits, head of human resources Ajoy Mukherjee said.
Shares in TCS, valued at more than $42 billion, closed down 0.5 percent at 1,103.95 rupees ahead of the results, while the overall market rose 1.7 percent. Infosys (INFY.NS) gained 0.8 percent.
($1=50.7 rupees)
