‘Quake, conflict fallout will impact IT sector’


Hyderabad : The fallout of conflicts in parts of the Middle East and the earthquake in Japan will impact global IT business, a top official of India’s largest software exporter Tata Consultancy Services (TCS) said Tuesday.

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He, however, considered the overall environment as positive.

N. Chandrasekaran, TCS chief executive officer and managing director, told reporters that the uncertainty continues to exist both at the macro level and specifically in some regions.

“The Middle East situation is worrying, and what has happened in Japan is unfortunate. These things will have an impact on business,” he said.

“We are now asking our employees to return to Japan as the situation is improving. We have a large number of clients to serve there,” he added.

TCS had called back its employees from Japan after an earthquake and tsunami hit the country March 11 that damaged the Fukushima nuclear plant, raising major radiation fears.

Japan accounts for a small percent of TCS revenues and the company does no have business in the uprising-affected Middle East countries, he said, adding that the situation, however, is a cause of concern.

Chandrasekaran said the overall business environment is positive.

“The US market is looking good. It is showing signs of growth. The overall mood is positive. Europe is also recovering, but lagging behind,” he said.

Europe accounts for 26 percent of TCS revenues. He said the company was looking at acquiring companies that add value or assets.

“We might look at acquiring a partner in healthcare segment in Europe,” the senior official said.

“We see a good pipeline across sectors including utilities, manufacturing, hi-tech and others with banking, financial and insurance sectors taking the lead. At any point of time, TCS will pursue over 20 large deals,” he said.

Chandrasekaran said the company margins are on the rise due to the improved execution and higher manpower utilisation of 83.1 percent.

“The margins increased by 500 basis points over the last seven to eight quarters,” he pointed out.

He said the company has so far recruited 50,000 people during the first nine months of 2010-11.

The company announced that it hired 37,000 campus recruits for 2012.

According to him, the demand environment is good.

“After several quarters, for the first time, we saw pricing uptake in the last quarter. During 2012 we will see more uptake,” he said.

Chandrasekaran, however, did not see the domestic market contributing more than 10 percent of the revenues.

“The growth in India will be conservative as it takes a longer time to close the deals,” he said.

The TCS Tuesday opened its first learning and development centre in Hyderabad to train campus trainees.

The firm already has five such centres in the country and plans to set up another facility in Thiruvananthapuram.

With 15 percent of associates in Hyderabad, the company had its fourth largest location here.