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TCS happy at beating expectations

July 19, 2006 14:05 IST

TCS has come out with an excellent set of numbers this quarter, which are above street expectations. Its total income stands at Rs 4,227 crore (Rs 42.27 billion), up by 13.96% QoQ. ItsĀ net profit is at Rs 883 crore (Rs 8.83 billion), up by 6.07% QoQ.

The company's CEO and MD, S Ramadorai is content with the performance of the company and hopes to carry forward the momentum. "All in all, it has been a very pleasant quarter; a happy performance and we hope the momentum carries forward and we are quite bullish about it," he said.

Head of Global Operations at TCS, N Chandrasekaran feels that the overall IT spend has been good and the pipeline for TCS seems healthy.

S Mahalingam, CFO, TCS says that although the company's margins have slipped this quarter, they expect to make up for some of the lost ground in the remaining quarters.

"If you look at the expectations, once we have delivered that the profit growth is much better than the growth that people had expected, obviously the margin impact has not been as much as one would have expected. We have some plan in order to make it up and hopefully we can better that," said Mahalingam.

N Chandrasekaran, Head, Global Operations, TCS, believes that the company has had an excellent growth in telecom and it sees a significant traction in the retail sector.

"I think in terms of growth, we had an excellent growth in telecom in Europe and BFSI continues to grow both in the capital market space, banking as well as in insurance. All our large clients and the ramp up of the two large banking and financial services wins that we announced last year is happening as per plan and they have contributed handsomely to the growth as well and the other sector where we are seeing significant traction is retail," said Chandrasekaran.

According to S Ramadorai, there have been some good deals in Taiwan and China, which will further spurt the growth curve for the company.

"Our Australian acquisition of FNS has turned profitable this quarter. They have won some very good deals in Taiwan and they are bidding on some very major engagements outside including in China, so we see that as definitely a growth engine for the future," said Ramadorai.

He further informs, "Our Diligenta deal in the UK; namely the Pearl deal is well underway with regard to the platform rationalization, which we talked about last quarter. As we go into the future, where more throughput will be achieved you will see people in terms of higher number of books and the offshore possibilities including outsourcing of infrastructure, so we plan to improve that and that is well underway. The integration is complete and the synergies are going to be extracted as we go down."

According to Ramadorai, the Chile acquisition which has won a number of deals in the regions has been showing a fair amount of progress. So in all, the three deals have shown a tremendous amount of improvement.

Ratifying the increase in headcount, S Padmanabhan, global head-human resources at TCS says that there has been extensive recruitment during this quarter in order to add the kind of talent pool that would bring in value to the company.

"During this quarter, there has been an extensive activity in the academic institutions. We have added a gross of over 7000 people. This year, we had an average increase of salary of about 15%. This is very necessary to keep the momentum on and now we are working on to ensure that to get the productivity out of this addition that we have done and we are really working on adding the kind of talent pool, which will start bringing in value to the company right from Day One," said S Padmanabhan.

S Ramadorai, CEO & MD, TCS further adds that the recruitment strategy will be aggressive in order to get candidates who would be productive in line with TCS aspirations and goals.

"We will certainly be very aggressive in recruitment; we will go to more colleges than we have been in the past. We plan to go to at least 300-plus colleges this year. We are also looking at beyond engineering graduates-mathematics and some of the science graduates and the training programme, which we would conduct for them would be a little longer but more importantly they would be very productive inline with TCS aspirations and goals," said Ramadorai.

He also says, "I think we have enlarged the pool very clearly and we also need to globalize in terms of recruitment from other locations in other parts of the world. So we are on a journey where the numbers are going to be large. We need to attract the best but we need to more importantly retain them by training them the right way."

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Surya Surendran, Moneycontrol.com