TCS Third Quarter Profit Rises 12%

Mumbai: Tata Consultancy Services Ltd is eyeing acquisitions in Europe as well as healthcare technology companies in the US to boost growth, its chief executive said on Tuesday, as India's largest IT services exporter post a 12-per cent rise in quarterly profit.

India's export-driven outsourcing firms are betting on US healthcare reform to fire up revenue growth which is slowing as the $150 billion industry's key financial and manufacturing clients spend less on software services.

The United States is the biggest market for the country's outsourcing industry, which is dominated by Tata Consultancy Services (TCS), Infosys and Wipro. It also accounts for 90 per cent of all healthcare related contracts for Indian IT outsourcing firms.

"We've said US healthcare is important to us and we've also said Europe as a market is important to us from an acquisition point of view," said TCS chief executive officer N Chandrasekaran.

TCS has joined the bidding process for Perot Systems, an IT management business of Dell Inc, people familiar with the matter told Reuters last week. Perot Systems is major provider of IT consulting to hospitals and government departments.

Mr Chandrasekaran declined to comment on the matter on Tuesday.

TCS, part of India's diversified Tata conglomerate, posted a net profit of Rs 6,110 crore ($914 million) in the quarter ended December, up from Rs 5,440 crore reported a year ago.

Analysts were expecting a profit of Rs 5,997 crore in the three month period ended December 31.

In the December quarter, the company's revenue in dollars, a key indicator of demand as it makes more than half of its sales in the United States, fell 0.3 per cent from the preceding quarter to $4.1 billion, disappointing some investors.

TCS said that the company faced some headwinds mainly due to US holidays during the quarter worsened by heavy flooding in the southern Chennai city, where is employs 65,000 people, roughly a fifth of its total workforce.

The US Congress last month doubled the cost of sponsoring workers under short-term visas, and spurred concerns of future curbs on IT work sent overseas by US companies.

Indian outsourcing firms, which send thousands of staff every year to work at client locations overseas, are likely to raise client fees and process more work from their low-cost centres in India to cushion the impact of the increase.

"We have an idea how much the impact would be based on trends, but we need to see going forward our resources deployment model," Mr Chandrasekaran said. "We have multiple options, I wouldn't overly raise a big concern on that."

($1 = Rs 66.8618)