Scope for cost cutting still exists, says TCS

Tata Consultancy Services (TCS), India’s largest IT firm, feels there is still scope for cost management, said CFO S Mahalingam. “We had initiated several mechanisms in the past few quarters and they have started to show results. We have put in a new organisational structure a year earlier. I would not like to depend just on cuts, but have a cost structure that will help in delivering the margins we have seen this quarter,” Mahalingam added.

TCS’ Q1 results for 2009-10 beat market expectations. Net profit rose 15 per cent and revenues grew half-a-per cent sequentially. The results were also impacted by a lower forex loss.

For Mahalingam, sustaining this growth over the next few quarters is a concern. “One of the biggest positives this quarter was no decline in revenue. There are some things that bother me. One, we need to completely focus on margins. Wewill need to diversify enough so that there is growth. Two, currency (value) remains an issue and, three; we are still in the cost growing area. How do we make sure that the cuts are sustained will be important,” he added.