TCS Q3 net profit rises 12 percent; beats estimates | Reuters - Firstpost
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TCS Q3 net profit rises 12 percent; beats estimates | Reuters

Updated: Jan 12, 2016 23:45 IST

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

India's export-driven outsourcing firms are betting on U.S. 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 percent of all healthcare related contracts for Indian IT outsourcing firms.

"We've said U.S. 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.

Chandrasekaran declined to comment on the matter on Tuesday.

TCS, part of India's diversified Tata conglomerate, posted a net profit of 61.1 billion rupees ($914 million) in the quarter ended December, up from 54.4 billion rupees reported a year ago.

Analysts were expecting a profit of 59.97 billion rupees in the three month period ended Dec. 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 percent from the preceeding quarter to $4.1 billion, disappointing some investors.

TCS said that the company faced some headwinds mainly due to U.S. 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 U.S. 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 U.S. 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," Chandrasekaran said. "We have multiple options, I wouldn't overly raise a big concern on that."

($1 = 66.8618 Indian rupees)

(Reporting by Himank Sharma; Writing by Sumeet Chatterjee; Editing by Keith Weir)

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