Posts Tagged ‘TCS’

IT stocks gain on weak rupee, positive US economic data

May 21st, 2015

Six IT stocks rose by 0.85% to 3.24% at 13:20 IST on BSE on positive economic data in US and weakness in rupee.Outsourcing44

Meanwhile, the S&P BSE Sensex was up 204.09 points or 0.74% at 27,849.62.

Among IT stocks, Infosys (up 1.32%), MphasiS (up 0.85%), HCL Technologies (up 2.56%) and Wipro (up 1.2%) gained.

TCS rose 1.66% after its client, Euroclear Finland launched platform, Infinity powered by TCS BaNCS for market infrastructure. The company made the announcement during market hours today, 20 May 2015. Tata Consultancy Services (TCS) announced that its client – Euroclear Finland – the central securities depository (CSD) for the Finnish capital markets, has launched a new transaction processing platform known as ‘Infinity’. Infinity is a multi-year program powered by TCS BaNCS for Market Infrastructure, and is a key component of Euroclear Finland’s outsourcing its securities settlement processing to TARGET2Securities (T2S) as part of the European Central Bank’s fourth migration wave in February 2017.

Tech Mahindra gained 3.24% after company said Ontario Ministry of Energy and the company invested in innovative Smart Grid solution powered by analytics. The announcement was made after market hours yesterday, 19 May 2015. Tech Mahindra announced that it will build an Intelligent Electric Vehicle Charging System (IEVCS) designed to help build Ontario’s clean energy future. The project, sponsored by the Ministry of Energy and funded in part through the Ontario Smart Grid Fund initiative, will analyze the effects of electric vehicle charging on transformers by creating a real time transformer monitoring and analytics solution.

Meanwhile, a report in US yesterday, 19 May 2015, showed a sharp increase in housing starts last month, pondering the effect it might have in determining the course of the Federal Reserve’s interest rate policy. Investors will get a closer look at the US Federal Reserve’s thoughts about interest rates and economic data when the minutes of the Federal Open Market Committee meeting from its meeting held in late April 2015 are released in the global day today, 20 May 2015.

US is the biggest outsourcing market for the Indian IT firms.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 63.82, compared with close of 63.68 during the previous trading session. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion’s share of revenue from exports.


IT shares trade firm; HCL Tech, Tech Mahindra up 3%

May 21st, 2015

Shares of information technologies (IT) companies were trading firm on the bourses, gaining upto 4% each, on the back of positive corporate announcements and weakening rupee.Outsourcing43

HCL Technologies, Tech Mahindra, Tata Consultancy Services (TCS), Persistent Systems and Cyient rose 3%-4% each, while Infosys, Wipro, Hexaware Technologies, Polaris Consulting & Services and MindTree gained 1%-2% each on the National Stock Exchange (NSE).

At 1311 hours, CNX IT index was the largest gainer among sectoral indices, gaining 1.8% compared to sub-1% gain in the benchmark CNX Nifty.

Tech Mahindra spurted by 3% to Rs 640 after the company said Ontario Ministry of Energy and the company invested in innovative Smart Grid solution powered by analytics.

Tech Mahindra announced that it will build an Intelligent Electric Vehicle Charging System (IEVCS) designed to help build Ontario’s clean energy future. The project, sponsored by the Ministry of Energy and funded in part through the Ontario Smart Grid Fund initiative, will analyze the effects of electric vehicle charging on transformers by creating a real-time transformer monitoring and analytics solution.

TCS gained 2% at Rs 2,563 after its client, Euroclear Finland launched platform, Infinity powered by TCS BaNCS for market infrastructure.

Infinity is a multi-year program powered by TCS BaNCS for Market Infrastructure and is a key component of Euroclear Finland’s outsourcing its securities settlement processing to TARGET2Securities (T2S) as part of the European Central Bank’s fourth migration wave in February 2017, TCS said in a statement.

Meanwhile, the rupee depreciated by 11 paise to 63.78 against the US dollar at the Interbank Foreign Exchange in early trade today as the American currency appreciated in wake of strong economic data, the PTI report suggests.


Wipro to open innovation lab in Silicon Valley by December-end

May 18th, 2015

Wipro Ltd will open a technology innovation centre in Mountain View, California, by the end of December as it seeks to build products on automation and artificial intelligence technologies in partnership with innovative start-ups nested in the Bay Area, thereby strengthening its offerings to clients when competing for large outsourcing orders.Outsourcing37

Wipro’s new facility—the firm’s first outside its headquarters in Bengaluru—will have to compete with global software giants, including Google Inc. and Facebook Inc. for talent and partnerships with start-ups, and comes after local rival Infosys Ltd decided to shut its research and development wing and merge it with other business units within the company earlier this year.

“Why Mountain View (having an office)? (Because) Bay Area represents that right area where we can bring together a lot of start-ups (to work along with our) customers,” Wipro chief technology officer K.R. Sanjiv said in an interview. “We are (already) working with lots of start-ups in the automation space and we are looking at having this facility opened by December-end”.

Sanjiv declined for now to give details on this innovation lab, including the number of engineers and scientists the lab will have, but another executive familiar with the development said that, for now, the firm plans to have “about 100-150 people” working out of the facility.

“We will have start-ups work with our core team, especially in areas of automation, artificial intelligence and big data,” said the second executive.

Wipro’s Bengaluru innovation lab has helped the company come up with its first artificial intelligence platform, Wipro Holmes, and other technology platforms for its banking and financial services customers and retail clients, which the company believes gives it an edge when bidding for outsourcing deals. The Bengaluru innovation centre employs nearly 300 people.

Silicon Valley is considered to be the cradle of start-ups focused on next-generation disruptive technologies and home to blue-chip companies across sectors. Firms ranging from Apple Inc. to Ford Motor Co. have significant presence in the area. Institutes such as Stanford University supply people to these companies, while venture capital firms such as Andreessen Horowitz help in turning many ideas into blockbuster products, thereby making the region a powerful magnet for companies across the world. Of late, many Asian firms, including Chinese search giant Baidu and South Korean electronics giant Samsung have set up research arms in Silicon Valley. India’s largest software exporter Tata Consultancy Services Ltd has a presence in the area for close to eight years. Its COIN, or Co-Innovation Network, screens almost 800-1,000 start-ups every year, some of which work with the Mumbai-based company.

“Silicon Valley is a unique, very dynamic innovation ecosystem where players are used to innovate across boundaries, and to experiment and take risks—so firms from around the world see this as a place where they can best learn fast and access skills and resources they need in order to succeed,” said Eilif Trondsen, research director at Strategic Business Insights, formerly Stanford Research Institute.

Sanjiv, who reports to Rishad Premji, head of group technology and strategy and son of chairman Azim Premji, said the company decided to merge the technology office with the strategy office earlier this year as technology is core to the future of any firm. “The tipping point for merging the role of strategy with technology happened over what we have seen over the last year or so. It is becoming more technology-led. Over the last two-three years, strategy was not so much technology dependent as far as process dependent. So historically, it was kept separate,” explained Sanjiv.

However, some observers believe that having a mere presence in the valley does not assure success.

“The vast majority of corporate incubators in Silicon Valley are disasters. That is because companies think that just by having some people in Silicon Valley, some magic will happen and their culture will change,” said Indian American technology entrepreneur and academic Vivek Wadhwa. “The problems are much more fundamental. This is likely to be the fate of incubators that Indian companies are setting up here as well. They are making the same mistake that American companies do.”

Infosys, the India’s second largest software exporter, knows this well as it had to shut its research and development arm, Infosys Labs, which first started in 1999, before merging it with the back-end verticals of the firm.

“They (Indian software exporters) are deluding themselves by thinking that by setting up Silicon Valley incubators and investing in some companies here, they will be saved. They need to be rethinking their entire strategies and reinventing themselves—not chasing Silicon Valley rainbows,” said Wadhwa, who in the past has suggested that Rishad Premji seek more partnerships with India-based start-ups.

Understandably, Wipro is going a little slow when engaging with start-ups, and said that 80% of the $100 million corpus kept with its corporate venture arm will be used to invest in start-ups based in the US and India.

“Our focus remains in the US and India. So let me put it like this, when making a strategic investment, focus will remain in US and India, and 20% for those in Europe and rest of the world,” said Sanjiv, who has a small team of “three-four” executives who evaluate start-ups that Wipro could partner. Last year, Wipro evaluated more than 200 start-ups, of which the company partnered with less than five and eventually bought a $5 million stake in Drivestream, a US-based start-up that helps in integrating Oracle cloud applications systems. “We are one of the funnels for start-ups before Venu and team (Wipro corporate venture heads Venu Pemmaraju and Biplab Adhya) come and make investments,” Sanjiv said.

For now, Wipro has partnerships with about 30 start-ups, and it has also made a minority investment of $30 million in New Jersey-based data analytics firm Opera Solutions. Wipro did make another investment of $5 million in machine-to-machine learning focused start-up Axeda, but sold its stake last year after the start-up was bought by a Nasdaq-listed firm.


IT firm TCS to start making investments in next two years for M&A deals

May 18th, 2015

Debashis Poddar may have a busy two years ahead. The global head of mergers and acquisitions at Tata Consultancy Services is expected to help boost the company’s appetite for M&A deals when its rivals are dipping deep into their wallets to buy growth.Outsourcing32

TCS, the country’s largest software services company, has always been a conservative player in the M&A space, a trait it used to share with others in the IT industry. However, over the past few months, Infosys and Cognizant Technology Solutions have become more aggressive in buying companies, while Wipro is boosting investments in startups.

Experts believe TCS will start making investments in the next two years or it will risk being left behind. “TCS must decide if it wants to lead or have others catch and surpass it in size and scale. It seems unlikely that they can maintain their leadership by relying exclusively on an organic expansion strategy,” said Peter Bendor Samuel, chief executive officer and founder of Dallasheadquartered outsourcing advisory firm Everest Group.

“If TCS is indeed committed to its publically stated goals of growth and broad industry leadership, it will need to raise its sights and change its historical posture regarding M&A.” Bendor expects TCS to jump into M&A in a much larger way than it has in the past. TCS has no lack of money to fund an acquisition. At the end of March, the company had about $2.8 billion in cash and bank deposits on its books and virtually no debt.

“You will find Debashis and TCS looking at every deal that comes their way, but they may have to start being less stringent about price because in the IP (intellectual property)-led deals the valuations aren’t cheap,” a private equity executive who interacted with Poddar and TCS told ET, declining to be identified.

TCS did not make Poddar available for an interview. Poddar has spent about 14 years at TCS. He previously worked at Arthur Andersen and GE Capital.

“Our M&A is dictated by strategic considerations in order to gain scale, acquire functional capability or for some other strategic value,” a TCS spokesperson said in response to an e-mail seeking comment. Even equity analysts say the company may need to boost its M&A activity, especially to compete in the fast-growing digital space.

“TCS’ M&A track record in digital (which we see as the next big 3-4 year opportunity wave) seems to be muted, especially in relation to what peers such as Accenture and Cognizant are habitually doing on acquisitions in this arena.

A more active M&A strategy in digital may help to power TCS’s platform strategy and more broadly, its digital practice,” Viju George, an analyst at JPMorgan, said in a note last month.

George also highlighted that the company’s strategy currently appears focussed on entering new markets than on game-changing digital acquisitions. TCS’ rivals have all become increasingly more active.


Wipro, Infosys and TCS See Europe as an “Achilles Heel”

May 14th, 2015

Although Europe is frequently seen as the next big frontier for the major Indian service providers, companies such as Wipro, Infosys and TCS are finding the continent to be an increasingly vulnerable place to do business.Outsourcing36

One reason is the euro’s volatility. Furthermore, the top Indian IT firms, previously enjoying growth rates of 25-30 per cent in Europe, are also now struggling due to top customers in the region, such as AstraZeneca, cutting down on their spending.

As a result, the Indian Economic Times has found that revenues for the majority of Indian’s biggest service providers operating in Europe have declined in the last quarter of 2014 and first quarter of 2015.


TCS net up 13.5 percent for fiscal 2015

April 23rd, 2015

Tata Consultancy Services (TCS) posted net profit of Rs.21,696 crore for the just-concluded fiscal 2014-15, registering a 13.5 percent year-on-year (YoY) growth as per the Indian accounting standards.Outsourcing32

In a regulatory filing to the stock exchanges on Thursday, the IT bellwether said revenue for the fiscal under review (FY 2015) increased 15.7 percent YoY to Rs.94,648 crore under the Indian financial reporting standards.

Under the International Financial Reporting Standards (IFRS), gross income grew 15 percent YoY to $15.5 billion and net income 12.8 percent YoY to $3.5 billion.

Earlier, the global software major reported net profit of Rs.5,906 crore for fourth quarter (January-March) of the fiscal under review, registering 11.5 percent YoY and 8.5 percent sequential growth.

Revenue for the quarter under review (Q4) increased to Rs.24,220 crore, reflecting 12.4 percent YoY and 1.6 percent sequential growth.

Under IFRS, gross income grew 11 percent YoY to $3.9 billion and net income 10.5 percent YoY to $951 million.

“Operating profit was Rs.25,424 crore for fiscal and Rs.6,591 crore for quarter, while operating margin increased to 26.9 percent for fiscal and 27.2 percent for quarter and volume growth was 16.9 percent YoY and 1.4 sequentially.”

“We are living in a world where technology is not just becoming integral to business but to our daily lives. We are playing a leading role in this ongoing revolution, helping our clients navigate and leverage digital to help grow their businesses,” TCS chief executive N. Chandrasekaran told reporters here later.

Though the IT outsourcing major hired a whopping 67,123 people last fiscal, a record 47,931 employees left the company during the last 12 months, resulting in net addition of 19,192 techies, taking the total headcount to 319,656 at the end of March 31.

Similarly, in fourth quarter, gross addition was 14,395 and net addition 1,031, as 13,364 techies left the company between January and March, resulting in its attrition rate touching 14.9 percent on annualised basis.

On the outlook for the new fiscal (2015-16), the chief executive said a strong foundation had been laid for growth and investments in platforms, digital and automation were gaining traction with clients.

“We are upbeat on seeing more opportunities in the ensuing quarters to partner with customers across multiple industries in the US, Europe and Japan where we have invested substantially in tools and people,” Chandrasekaran asserted.

To mark the company’s 10 years of going public, the board announced a special reward to all its employees who completed one year service.

“Employees completing one year of service will be eligible for the special reward, which will be equivalent to a week’s salary for every year of service,” the company said in a statement.

The reward will cost the IT sourcing major Rs.2,628 crore ($423 million)

“We have maintained our profitability in a challenging operating environment, where currency has been a strong headwind for some time,” chief financial officer Rajesh Gopinathan said on the occasion.

Noting that there was holistic growth across markets and industries during the fiscal under review, Gopinathan said Europe led growth in major markets, while Britain and North America grew in line with the company average.

“All major industry verticals grew in double digits led by retail, manufacturing, life sciences & healthcare and BFSI (banking, financial services and insurance) in the fiscal,” Gopinathan added.

The company made 25,000 offers on engineering campuses for trainees who will join from second quarter (July-September) of this fiscal (2015-16).

“Our attempts to build a next-gen organisation that is social, mobile, engaged and collaborative continues. We are also extending the model of using social and platform-based collaboration tools to connect with students from colleges across India and globally,” TCS’ human resources head Ajoy Mukherjee said.

TCS also crossed the milestone of employing over 100,000 women, with gender diversity of 33 percent and 122 nationalities represented in its global workforce.


TCS Bids ‘Ta-Ta’ to Fast Growth

April 17th, 2015

Shares in Tata Consultancy Services are priced for perfection. Little wonder that investors rush to part ways at the slightest sign of trouble.Outsourcing29

The information technology outsourcer posted mildly disappointing earnings on Thursday evening. In the three months to March, revenue in U.S. dollar terms fell 0.8% from the previous quarter; analysts had expected a slight increase.

That might not seem like a big miss, but investors took the news hard, sending TCS shares down 4% in morning Mumbai trading. This follows a similar episode two quarters ago, when a slight miss on top-line estimates for the September quarter sent shares down 9% in a single session.

TCS is the first of India’s major IT companies to report earnings for the March quarter. As the country’s biggest outsourcer by revenue, it is also an industry bellwether. The entire sector faces challenges from the strong dollar, as well as declining spending by energy companies in the wake of the oil-price bust.

TCS reports revenue in dollars, but gets around a quarter of its revenue from the U.K. and continental Europe. In the first three months of 2015, the pound fell 5% against the U.S. dollar, and the euro dove 12%, making revenue look worse in dollar terms. Costs are mostly in rupees, which have been stable against the dollar.

Longer term, the weaker euro will boost the competitiveness of Europe’s own IT providers such as Capgemini and Atos, notes Jefferies analyst Atul Goyal, lessening the appeal to European companies of going offshore.

Research firm Gartner sees total world-wide IT outsourcing spending falling slightly this year due in part to the drag from technology-expense cutbacks in the fossil-fuel industry. The impact on TCS won’t be huge, as energy and utility companies together account for just 4% of revenue, but it is another headwind.

The bigger issue is where TCS will find growth to underpin investor’s lofty expectations. From fiscal year 2011 to 2014, its annual profit growth averaged 21%. Those days are gone. For fiscal year 2015, which ended in March, the pace slowed to 13%.

Even that excludes the impact of a generous one-time employee bonus. Including the bonus, profit for the year was up just 2.3%. While the current fiscal year may not see such a magnanimous outlay, compensation costs are rising. TCS’s employee-attrition rate has worsened as developers increasingly hopscotch from firm to firm.

Analysts see profit growth excluding bonuses slowing to 9% for the current fiscal year. Despite this, TCS’s shares are still trading at 20 times forward earnings, in line with their five-year average. That may have made sense at one time, but not anymore.


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