Tuesday, July 21, 2009

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US banking, finance customers stabilising: TCS

Along with some stabilisation in the banking and finance sector, India’s largest IT services provider Tata Consultancy Services (TCS) is seeing green shoots in the retail and other sectors in the US market as well.

The US contributes to over 55 per cent of the company’s total revenue and the BFSI (banking, financial services, insurance) segment contributes to over 43 per cent.

“In the US, each vertical is playing out differently. Manufacturing still seems to be soft. Last week, we saw another bankruptcy. Telecom and hi-tech remains a concern. But in the areas of banking and finance, we believe things have stabilised. In the past six months, there was a lot of transition happening and new teams were coming in. Now all the new teams are there and we see much more stability,” Surya Kant, President, TCS - North America, told Business Standard.

Some customers of TCS have done mergers and acquisitions (M&A) in the recent past. In some cases, such clients are talking about what they want to do, especially where consolidation has already taken place. These are positive signals, notes Kant, but adds that “discretionary spend is still under pressure”.

But more than the US, TCS is seeing pressure in the UK region, with one of its top telecom clients (BT) under pressure and revenue from this client dropping successively. “In this particular client’s case, I can only say that it has a certain budget and is trying to use less of it. Moreover, in both Germany and the UK, this will be an election year. Hence, even government deals might be difficult,” cautioned A S Lakshminarayanan (Lakshmi), Vice President and Head, Europe TCS.

Lakshmi added that recent conversations with customers from Europe and the UK have revolved around efficiency and reducing costs. “And it is not always about offshoring. There are a number of other levers we can use to help customers gain that,” he said. Lakshmi added that TCS has been able to break into new clients and has signed a couple of deals in sectors like utilities, travel and hospitality, logistics and pharma.

In its US operations, TCS will be ramping up its Cincinnati centre’s headcount to 1,000 people in the next three years. “The Cincinnati centre is our comitment to the North America market. We are not only hiring from the state of Ohio but across the US. The centre will handle work like business analytics, front desk, work that can be done in the same time zone and work that needs to be done quickly, like proof-of-concept or pilots,” said Kant.

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