India's largest outsourcer, Tata Consultancy Services (TCS), reported Monday strong growth in revenue and profit, despite the appreciation of the Indian rupee against the U.S. dollar and higher staff costs in India.
"This is a great performance in challenging times," S. Ramadorai, TCS's CEO and managing director, told analysts on Monday.
The company reported for the quarter ended June 30 revenue of 52 billion rupees ($1.28 billion), up 25.6 percent from the same quarter a year ago. The company's profit for the quarter was 11.8 billion rupees, up 37.4 percent from the same quarter in the previous year.TCS's revenue and profit were, however, flat in rupee terms in the quarter to June 30 in comparison to the previous quarter ended March 31, reflecting the appreciation of the rupee against the dollar. Revenue and profit, however, grew 8 percent quarter-on-quarter in dollar terms.
The company added 54 clients and 5,512 employees during the quarter, taking the number of employees to 94,902. Staff attrition rate in the quarter was 11 percent in its IT services business, with the attrition rate higher at 16.7 percent in its business process outsourcing business.
In the quarter to Sept. 30, TCS plans to hire 11,000 more employees.
TCS, of Mumbai, said its net margins were not affected despite the rupee appreciation and a planned wage increase during the quarter, because of better cost management, currency hedging and productivity increases.
A strong rupee affects margins of Indian companies as it brings down the value of foreign revenue in terms of rupees, even as costs incurred in India, such as staff costs, are going up.
The company increased salaries of its Indian staff by between by 12 percent to 15 percent from April 1, S. Mahalingam, TCS's CFO said.
The market for offshore services is buoyant, and in the quarter to June 30, TCS's revenue grew 42 percent in dollar terms over a year ago, Ramadorai said. The company has been able to negotiate higher billing rates from customers, he added.
India's second largest outsourcer, Infosys Technologies, reported last week a 40.6 percent growth in revenue and 51 percent growth in profits in the quarter.
India's software and services exports are projected to grow by 26 percent to 29 percent to about $40 billion in the fiscal year to next March 31, India's National Association of Software and Service Companies said this month.
This story was updated on July 16, 2007
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