TCS lift up sentiments with positive outlook
R Chandrasekaran
The leader leads the way. India’s biggest software service exporter Tata Consultancy Services has not only delivered its fourth quarter results in line with expectations, but said it’s also confident of performing better than the industry in the next fiscal year.
That keen outlook, along with HCL Technologies’ quarterly results, could bring back the confidence of investors on IT stocks.
Last Friday, Infosys delivered its quarterly results that have not only disappointed street expectations, but its forecast also spelt a doom for investors in the near term. This has dented investors’ confidence on IT stocks, which was hammered on Friday. It is quite clear from the performance of TCS and HCL Technologies that Infosys is slowly losing its grip on its strategies. However, the concern on overall hiring in the IT sector continues to remain.
TCS has indicated that it intends to hire about 45,000 professionals in the next fiscal year, whereas Infosys prefers to hire as and when needed. HCL Technology is still to provide joining dates for thousands of engineering graduates who have been given offer letters. The intended hiring by TCS is also lower than its last year workforce addition, thus indicating the underlining weakness.
The leading software service provider’s profit jumped 22 percent to Rs.35.97 billion in the March quarter from Rs.29.46 billion. In contrast, Infosys could see only 3.4 percent upside in profit. Similarly, while TCS’ quarterly revenue jumped 24 percent to Rs.164.30 billion, the second largest IT company recorded an 18.1 percent jump in top line. In terms of volume too, TCS could see 4.4 percent growth sequentially, whereas Infosys recorded a 1.8 percent upside.
Speaking on the results, TCS managing director and CEO N Chandrasekaran said, “All the markets delivered growth. We added 153 new clients and hired more than 69,000 employees in the last financial year. The retrenchment levels are very high.” He added, “Our deal pipeline is strong. The telecom sector will see a recovery in the coming quarters,”
TCS results were in line with the Street expectations. However, what is significant is the confidence with which Chandrasekaran looks at the next fiscal year. At a time when everyone is concerned over the US budget cuts that could have potential negative impact on IT spending, the leader is confident of delivering higher growth than what the National Association of Software Service Companies predict for the next fiscal year.
TCS has not been providing annual outlook and its comments assume significance in the challenging environment. The trade body estimates a growth of 12 – 14 percent for the next fiscal year ending March 2014.
The top IT company, which recently acquired a company in France, is also willing to probe similar opportunities in Japan and German.
The results and the comments on outlook by TCS clearly demonstrate that the IT industry could wither the storm and perform creditably, but the fact remains that uncertainties continue to threaten it.
To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com