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Large outsourcing contracts boost TCS profit news
17 April 2007

Mumbai: Tata Consultancy Services Ltd, the country''s biggest software exporter, saw its January-March profit rise 47.4 per cent from a year ago, helped by a slew of large outsourcing contracts.

Revenues rose 38.2 per cent to $1.2 billion (€920 million) during the quarter, taking annual revenues to $4.3 billion (€3.3 billion). Net profit rose to $270 million (€207 million) in the January-March period compared with $183 million in the same quarter a year ago, TCS said in a statement.

TCS won 12 outsourcing contracts valued at more than $50 million (€38 million) each during the financial year that ended March.

The company is pursuing at least 10 deals valued at more than $50 million each, chief financial officer S Mahalingam said.

"The significant number of large wins ... that will ramp up during the next fiscal year makes us confident of continuing sustained, profitable growth," chief executive S Ramadorai said in the statement.

The earnings numbers, which conform to US accounting standards, were largely in line with expectations. The company didn''t give any guidance for future revenues and profits.

For FY07, TCS recorded a 41 per cent growth in software revenues at Rs18,685 crore and a 42 per cent jump in net profit at Rs4,212.63 crore.

"TCS'' robust business model using our full-services play and global delivery network model have given us pole position to capitalise on the strong demand environment that exists globally," Ramadorai said, adding, it has taken a forex cover of $1 billion.

The company is banking on its ability to deliver on large and complex engagements, cross-selling and on the full-services model to ramp it up. Of the 12 over-$50 million deals the company signed in FY07, five involve full-services play comprising IT, BPO and infrastructure services.

High growth business lines such as consulting, BPO, infrastructure services, and assurance and testing have also gained critical mass, accounting for 18 per cent of its revenues or $800 million. TCS added 43 new clients during the quarter under review and 218 during the full fiscal.

While the rupee has firmed up against the US dollar, the company''s geographical mix with the share of revenue from North America in FY07 dropping to 52.3 per cent from 56 per cent a year ago seems to have stood the company in good stead. Also, its UK market grew from 15.2 per cent to 20.3 per cent. These have made the company less vulnerable to currency fluctuations than its peers who derive more than 60 per cent revenue from the US market.

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Large outsourcing contracts boost TCS profit