India's Tata Consultancy may boost workforce after profit leap

Reuters

* Q2 net profit 47.02 bln rupees vs analysts' estimate of44.7 bln

* Financial sector and Europe boost results

* Operating margin hits record 30 pct

By Aradhana Aravindan and Harichandan Arakali

MUMBAI/BANGALORE, Oct 15 (Reuters) - Tata ConsultancyServices (TCS), India's largest IT services exporter, isconsidering accelerating its hiring plans after beatingquarterly profit expectations on increased demand from financialclients and in Europe.

Companies such as TCS have stepped up efforts to increasetheir market share in continental Europe in recent years toreduce dependence on the United States, which is by far thebiggest market for India's $108 billion IT services industry.

TCS and rivals such as Infosys and IBM wona record $6 billion of IT contracts in the three months to Sept.30, according to the Information Services Group consultancy,partly driven by IT outsourcing by European companies looking tocut costs.

Continental Europe contributed 11.2 percent of TCS revenuefor the quarter, against 9.7 percent in the same period lastyear.

"Our pipeline is good, and I think from here we need to lookat scaling in Europe," TCS Chief Executive N. Chandrasekarantold reporters after the company posted consolidated net profitfor the quarter up 34 percent year on year to 47 billion rupees($760 million).

That compared with an average of 44.7 billion rupees inestimates by 27 analyst, according to Thomson Reuters I/B/E/S.

TCS, which employs 285,250 people, is on track to hit itsgross hiring target of 45,000 to 50,000 staff for the financialyear to March 31 and would consider going beyond that figure,said head of human resources Ajoyendra Mukherjee.

"We're quite positive, so we may increase hiring numbers,"CEO Chandrasekaran added.

Shares in the company, India's largest company by marketvalue, hit a record high on Monday in expectation of theearnings announcement after the stock market close on Tuesday.The shares were little changed on Tuesday, finishing the day at2,215.40 rupees.

TCS's operating margin rose to a record 30.1 percent, withthe rupee's decline against the dollar lifting the margin bythree percentage points. The bulk of the company's contracts arein dollars.

The financial sector accounted for 43.1 percent of thecompany's quarterly revenue, up from 42.8 percent a yearearlier.

On Friday Infosys, India's second-largest IT servicesprovider, said that improving macroeconomic conditions auguredwell for client spending on IT outsourcing and raised the lowerend of its revenue forecast range.

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