Tuesday, September 8, 2009

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Tata Consultancy CEO says demand pipeline good

Tata Consultancy Services Ltd (TCS.BO), India's top IT services firm by sales, is seeing more stability stability and the demand pipeline is good, its chief executive said on Monday.

"Essentially, the drastic downturn is behind us and we have entered a new phase where we are seeing stability on the ground and it is not in a downward spiral for sure," S. Ramadorai, who retires from his office next month and will become vice chairman, told reporters.

After posting a scorching pace of growth for years, India's export-driven outsourcing sector has been battling a slowdown as top global customers were hit by the financial crisis and economic downturn.

Ramadorai said the order pipeline was good but there could still be some occasional shocks.

Hopes for a pickup in outsourcing demand have increased after leading companies such as TCS and Infosys Technologies (INFY.BO) beat street estimates in their April-June earnings and on signs of stability in the global economy..

TCS, which provides services such as consulting, system integration and manages call centres, was one of a number of outsourcing firms that won five-year IT contracts from oil and gas major BP (BP.L) last month.

"There may be couple of similar deals, which we will be working on," Ramadorai said, adding the deals would include providing technology infrastructure or call centre services.

He had earlier said the BP deal would likely add to revenue from the next quarter and contribute $30 million to $100 million on an annualised basis over the next three to five years.

Shares in Tata Consultancy, whose clients include Citigroup (C.N), General Electric (GE.N), Lloyds TSB (LLOY.L), and Singapore Airlines (SIAL.SI), were up 2.9 percent at 547 rupees by 0906 GMT, outperforming the broader Mumbai market .BSESN that was up 1.7 percent.

Banking, financial services, retail and utility were showing promises in terms of new outsourcing deals, Ramadorai said, but sectors such as manufacturing and telecoms would continue to show sluggishness in the near future.

Tata Consultancy gets more than 40 percent of its revenue from banking and financial services clients and Ramadorai said the company could win some deals from the integration of global banks in the aftermath of the financial turmoil.

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