TCS feels US pinch
SOURCE:The Telegraph
DATE: March 6th, 2008
The slowdown in the US economy has finally started to hurt India’s software giants.
Tata Consultancy Services (TCS), the country’s largest software exporter, today admitted that two of its top 15 clients based in the US had “delayed a couple of assignments”.
Until now, software companies have maintained that there has been no sign of any decline in IT spending in the US after reports of a looming recession.
N. Chandrasekaran, chief operating officer of TCS, refused to say whether the project delays would impact the company’s earnings in the fourth quarter ending March 31.
Earlier, the company had said salary hikes this year would be around 10 to 13 per cent — lower than that of the previous year.
This is the first time that the company has admitted that there are “delays” in decisions from the client side.
While announcing the third-quarter results in mid-January, the company had downplayed the effect of the slowdown by saying, “The jury is still out on the slowdown; we are cautiously confident about the future.”
The company had emphasised that customers were migrating to higher revenue bands. “Twenty-five large deals are in the pipeline and we are not just looking at the banking and financial services industry. The deals are from all verticals like retail and travel.”
Low-cost product
TCS today launched a low-cost product for small firms. IT-as-a-Service (ITaaS) is an innovative business model that will give small and medium businesses the experience of customised, low-cost solutions scalable to their growing business needs. The service will initially be offered in the domestic market and later expanded overseas. TCS is looking at annual revenues of $495 million from the new activity in about five years.
“It is possible to develop a Rs 200-crore business in four to five years,” Chandrasekaran said. “Our aim is to become a leading end-to-end business solution provider in the SMB segment,” said S. Ramadorai, chief executive officer of TCS.
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