TCS looking for acquisition in Europe

25 Oct 2010

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Tata Consultancy Services (TCS), India's largest software firm, has been looking for acquisitions in Europe, but is yet to find one that is a suitable fit, according to its chief executive officer N Chandrasekaran.

The company, which surprised the street last week by notching $2 billion in revenues and an over 30 per cent growth in net profit for the second quarter of this fiscal, wants to broad-base growth by expanding in markets such as China, where it already has a joint venture with the Chinese government, and increasing penetration in Europe.

''We are looking for a medium-size company with a strong market presence in countries such as Germany and France. The acquisition has to be a mutual fit,'' Chandrasekaran said in newspaper interviews over the weekend. Recovery in Europe is still slow, he said. Cultural fit is one of the criteria the company will look for in continental Europe, which contributes close to 10 per cent of its revenues.

More business in China and Europe and growth in non-linear initiatives are some of the engines that will continue to deliver growth beyond $6 billion for TCS, whose mission statement a few years ago was to be among the global top-10 technology firms.

Now the ninth-largest IT services firm globally, Chandrasekaran said TCS is yet to outline a new mission statement. Since he took over as chief executive last October, two of Chandrasekaran's focus areas have been to smoothen out large variations in some revenue streams such as in the India business, and improve profitability.

Its second-quarter operating margin of 28 per cent - the best for TCS in many years - came on the back of higher efficiency, offshore leverage, and better execution and utilisation, Chandrasekaran said.

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