outsourcing stock

Tata Consultancy Services reported strong revenue and profit growth in the second quarter as demand for its services picked up in key markets like the US and Europe.

The company has seen revenue growth across all its key industry segments and geographies, said CEO and managing director N. Chandrasekaran.

The deals pipeline for the company is strong both in the US and Europe, making it likely that the current fiscal year ending March 31 will be a good one, he added.

TCS said its revenue in the second quarter rose by 16% year-on-year to over $3 billion. Net income increased by 10.6% to $668 million.

The company has boosted staff utilisation, a critical measurement in the outsourcing industry, to 82.7%, excluding trainees, and also cut staff attrition to about 10.5%.

Regulatory changes and new proposals aimed to boost employment in some countries like the US have not affected customer spending on TCS, Chandrasekaran said. The company will analyse the changes in regulations if they come into force, and decide how to change its business model in the new environment, he added.

Indian outsourcers are worried that an immigration bill in the US if passed in its current form could increase costs for outsourcers and lead to more work getting moved offshore, affecting businesses that require proximity to customers. The bill, which was passed by the US Senate but has encountered difficulties in the House of Representatives, would prevent companies with more than 15% of their US-based staff on H-1B visas from placing those employees to work on-site for US companies.

"We need to see the bill in its final form before we analyse its impact," Chandrasekaran said.

TCS has been expanding in many markets through its own facilities and by acquisitions. In June, it completed the acquisition of Alti, an IT services company in France, to service customers in that country and other regions in Europe.

The company added 1,390 staff in the quarter taking the total employee strength to 277,586.

Infosys, India's second largest outsourcer after TCS, said last week that its revenue increased in the second quarter by 13.6% year-on-year, while profit rose by only 0.5% on account of salary increases and the impact of currency fluctuations.