MUMBAI |
MUMBAI (Reuters) - Tata Consultancy Services (TCS.NS), India's largest software services exporter, has an order pipeline that is "very healthy" across sectors, its CEO said on Wednesday, a day after the company reported a 23 percent rise in quarterly profit.
"We are seeing deal closures in Europe, which essentially means there will be good growth in coming quarters," N. Chandrasekaran said in an interview. "The main thing is we are not seeing any shocks or slowdowns in our customer portfolio."
Growth in Europe has been "excellent", he said.
TCS and second-ranked Infosys (INFY.NS) are part of India's $76 billion technology services industry, serving clients in the United States and Europe, their biggest markets.
They compete with companies such as Accenture Plc (ACN.N) and IBM Corp (IBM.N) for orders from clients including Citigroup Inc (C.N), Procter and Gamble Co (PG.N), BP Plc (BP.L) and Volkswagen AG (VOWG_p.DE).
"A vast majority of our clients have completed budgets," Chandrasekaran said. Two-thirds of these are either unchanged or higher compared with calendar year 2011. "We continue to close deals."
UPBEAT ON OUTSOURCING DEMAND
He said "both deals and ramp-up of clients is quite good" in the United States, which contributed more than half of Tata Consultancy's sales in the December quarter.
"From a business point of view, I think that customers are spending money and customers are looking at innovation. I think there are plenty of things going for us."
Chandrasekaran was upbeat about the outlook in contrast to Infosys, which last week cut its dollar sales forecast for the fiscal year ending March citing potential order delays and cuts in clients' technology budgets due to the European debt crisis.
"Given where we are in Europe, naturally our growth will come from taking away market share," he said, when asked about rivals such as Capgemini (CAPP.PA) and IBM. "Who do we take away market share from is the moot point."
TCS's revenue from Europe, its second-biggest market, rose 18.1 percent in the December quarter from July-September.
"I think we have an expanding market at multiple levels. I don't see a growth problem," said Chandrasekaran, a long-distance runner having completed marathons in Mumbai, New York, Prague, Stockholm and Vienna.
"I only want to focus on sustainability in terms of the business model, so we are successful in executing that growth. I don't think there is a demand problem."
TECH SPENDING
Global spending on information technology will rise at the slowest pace in three years in 2012 as Europeans, worried about the region's sovereign debt crisis, are cutting back on investments, research firm Gartner Inc said this month.
Gartner predicted global IT spending would rise 3.7 percent in 2012, down from its earlier estimate of 4.6 percent. The forecast for Western Europe was slashed to a 0.7 percent drop in spending from a previously expected rise of 3.4 percent.
Chandrasekaran said technology spending was increasing.
"We are operating in a trillion dollar industry. The pie is increasing, and within that pie, TCS is continuing to expand our offerings," he said.
Still, analysts said demand might be hurt by customers holding back on "discretionary spending", which refers to software programmes and applications that are desirable but not immediately necessary for business to carry on.
"While TCS is optimistic about the environment, management commentary indicated softness in business evidenced by delays in decisions especially on the discretionary projects side," HDFC Securities said.
The brokerage downgraded it's rating on the stock to "hold" from "buy".
TCS on Tuesday met market estimates for third-quarter net profit as it won new outsourcing orders, while a weaker rupee boosted margins.
Shares in TCS, which has a market value of about $42 billion, were down 2.8 percent at 1,073.40 rupees by 0903 GMT, after having fallen as much as 5.3 percent to their lowest level in nearly two months.
The main Mumbai market was down 0.2 percent.
(Additional reporting and writing by Harichandan Arakali; Editing by Aradhana Aravindan and Ranjit Gangadharan)
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