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Tata
Consultancy, Infosys Profits Climb on Overseas Orders
www.bloomberg.com
Oct.
11 (Bloomberg) -- Tata Consultancy Services Ltd., India's biggest software company,
and No. 2 Infosys Technologies Ltd. said second-quarter profit climbed as they
won more orders from overseas clients such as ABN Amro Holding NV.
Tata Consultancy's net income rose 83 percent to 6.73 billion rupees ($150 million)
in the three months ended Sept. 30, from 3.68 billion rupees a year earlier, when
it took a one-time charge for employee stock options. Infosys' profit rose 36
percent to 6.06 billion rupees from 4.47 billion rupees.
Indian software
makers including Tata Consultancy and Infosys are winning orders from European
customers such as ABN Amro Holding NV to lift sales, reduce reliance on the U.S.
market, their biggest source of revenue, and compete with rivals such as International
Business Machines Corp. Tata Consultancy and Infosys received orders valued at
about 300 million euros ($360 million) from ABN Amro, the largest Dutch bank.
The earnings ``confirm our expectations that larger Indian companies are finding
it easier to get orders,'' said Anoop Bhaskar, who helps manage the equivalent
of $468 million, including shares of Tata Consultancy and Infosys, at Sundaram
Asset Management in Chennai. ``Mid-sized software companies are going through
a more painful period.
'' Tata Consultancy's shares, which rose to
a record on Oct. 3, gained 1.3 percent to 1467.9 rupees at the close of trading
on the Mumbai stock exchange. Infosys shares climbed 2.3 percent to 2,683.9 rupees,
the highest since March 2000.
Tata Consultancy's profit rose 17 percent
excluding the one- time charge of 1.87 billion rupees it took in the year-earlier
quarter for awarding stock options to employees, and other costs. Excluding the
one-time charges, year-earlier profit was 5.77 billion rupees. Tata Consultancy's
sales rose to 29.5 billion rupees in the quarter from 24.3 billion rupees a year
earlier. The company added 74 customers in the period.
European
Plans
Under Chief Executive S. Ramadorai, 60, Tata Consultancy
is is expanding its range of services to include maintenance of computer networks,
providing engineering designs and using its software to isolate molecules for
drugmakers.
Ramadorai plans to make Amsterdam his company's European
headquarters and has set up software centers in Hungary to take advantage of demand
from customers using Indian software makers to cut costs.
``Software
companies are seeing a strong demand for information technology services,'' said
Viswanathan Vasudevan, who helps manage $150 million in Indian stocks at Aquarius
Investment Advisors Pte in Singapore.
Tata Consultancy is widening
its service offerings and acquiring companies such as group unit Tata Infotech
Ltd. to boost sales. General Electric, its biggest customer, accounted for about
12.3 percent of overseas sales in the second quarter compared with 13.1 percent
in the preceding three months.
Tata Consultancy added 4,224 employees
in the second quarter, taking its total to more than 50,000, the company said.
It added 74 customers in the period.
Rupee Decline
The
software maker also benefited from the depreciation of the Indian rupee against
the dollar. It made a gain of 40 million rupees in the quarter because of the
weaker rupee, Chief Financial Officer S. Mahalingam said in Mumbai.
The rupee is declining as the country's trade gap widens, with imports outpacing
exports and foreign currency inflows slowing. The rupee weakened to 44.88 against
the dollar today, the lowest level in more than 10 months. The U.S. accounts for
about 60 percent of sales, making revenue earned in dollars more valuable in the
event of a decline in the rupee.
At Infosys, sales in the second quarter
rose 31 percent to 22.94 billion rupees, from 17.5 billion rupees a year earlier,
as the company expanded services to include business consulting and management
of clients' information technology networks.
Earnings Guidance
``The earnings were good, coupled with the company raising its revenue
and earnings guidance,'' said Sandeep Neema, who helps manage about $73 million
of stocks at J.M. Financial Mutual Fund in Mumbai. ``Earnings are showing that
the business momentum is positive.
'' The depreciation of the rupee
and new orders have prompted Infosys to increase its profit and sales forecast
for the year to March 31. The company expects earnings per share may rise 30 percent
to 89.40 rupees in the year ending March 31, under Indian accounting rules, it
said today. The company expects sales to rise 32 percent to 93.83 billion rupees.
Infosys added 34 new customers, taking the total number of customers to 450 at
the end of September.
The software maker added 6,390 employees in
the quarter ended Sept. 30 for a total of 46,196 workers, more than double the
3,056 people it added in the preceding quarter. Tata Consultancy, Infosys and
other software makers probably hired a record number of employees in the three
months ended Sept. 30. Software makers hire the highest number of employees in
the September quarter when students pass out of engineering colleges.
`Going Head to Head'
Accenture Ltd., the world's second-largest
consultant, and Armonk, New York-based International Business Machines are trying
to boost growth by increasing hiring in low-wage countries, including India, posing
competition for local software makers.
``We are increasingly going
head-to-head with the big global competitors,'' Infosys Chief Executive Officer
Nandan Nilekani told investors in a conference call. ``Every chief executive is
asking his chief information officer why they are not doing work in India.
''
Accenture has increased its workforce to 35,000 in countries such as India and
plans to boost that to 50,000 over the next three years. IBM, the world's largest
consultant, plans to hire 14,000 workers in India by the year-end to 38,196 employees,
according to the Seattle-based Washington Alliance of Technology Workers Unions.
Infosys is expanding abroad as competition intensifies at home. The
company, which has about 300 people in China, plans to add 700 more workers by
March, it said. By 2010, it plans to have 6,000 workers in China; the world's
fastest growing major economy.
To contact the reporters on this story:
Saikat Chatterjee in New Delhi at schatterjee4;
Chitra
Somayaji in Bangalore at csomayaji
Last Updated: October
11, 2005 09:39 EDT Top |
