Thursday, January 22, 2009

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Indian IT clients to cut IT spends to 20 percent: TCS

Indian IT firms seem to be foreseeing tough times ahead. "Deepening financial crisis may force the clients of IT services firms to cut their IT budgets, and IT spend is likely to be declined by 5 to 20 percent this year," according to S Mahalingam, CFO, Tata Consultancy Services (TCS).

At the same time, offshoring turn to be a major area of revenue for Indian IT firms as most the foreign companies shift focus towards offshoring to cut the cost amidst slowdown. "Clients are cutting budgets but I don't think the demand for our services needs to come down. There will be more offshoring. It may affect revenues to some extent but we have said we would like to increase the extent of offshoring," said Mahalingam.

On Satyam scandal, Mahalingam demanded speedy action to bring the perpetrators to book. He believes that foreign institutional investors had a large holding, and therefore one needs to identify the guilty and take corrective action quickly or it may lead to a credibility gap on the global stage.

Mahalingam pointed out that TCS have been approached by some of Satyam clients to see if the company is ready to take more work. "Some wanted us to hire their team at Satyam and we have said no," mentioned the TCS CFO.

After the Satyam fraud, some of the TCS' own clients had approached the company for information about its corporate governance, checks and balances within the firm, separation of duties and authority levels.
TCS' salary hike this year may not go up to the 2008 level of 10 percent and Mahaligam said that the hike would largely be in the variable component of the salary.


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