TCS wrapping up FY with string of multimillion dollar deals

Thursday, March 17, 2011

The Latin America division of Indian IT services firm Tata Consultancy Services (TCS) is closing its fiscal year with several multi-year contracts, each worth more than US$5mn, the company's Latin America COO, Ankur Prakash, told BNamericas.

Three major deals have come in the banking sector, in addition to a significant contract in manufacturing and another with a regional multi-industry group.

BNamericas previously reported that TCS Latin America posted 8% year-over-year growth during its fiscal H1, but Prakash said recent deals put the division firmly into double-digit growth territory as its fiscal year ends March 31.

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"Most of the projects are more than three years... and they are worth more than US$5mn," Prakash said. "The services will be development, maintenance and support of systems. In a couple of cases, we are doing implementation and support of ERP systems. In most cases, it is a mixture of consulting and testing."

The contracts come amid a spike of client activity that has lasted 3-4 months and is seen increasing into the future. Investment is increasing particularly in countries like Colombia, Peru, Brazil and Mexico, Prakash said.

"The customers are ready to spend more on critical projects," he said. "There is pent-up demand that is slowly but surely getting out."

Although TCS Latin America's average total billing size has crept up 3-5% year-over-year, and the division remains focused on contract lengths of 2-5 years, growth has been driven by a greater overall number of projects, Prakash explained.


In recent months, TCS Latin America has been focusing on driving growth through key accounts, and Prakash said that strategy will be extended into next fiscal year.

Focus areas next year will also include projects in telecommunications and manufacturing, while additional opportunities will come through e-government deals.

"Our offering for e-government [includes] digitizing some of the government functions," he said. "We are looking at participating in public bids that will be coming out.... One is a Caribbean country, and the other one is in South America."

Brazil and Mexico will be the main overall growth drivers, while other countries like Peru, Colombia and Argentina will be "catching up."

The executive was unable to provide concrete expectations for next fiscal year, but noted that sales increases will supersede this year's growth.

Globally, TCS saw its net profit rise 14% to US$517mn for fiscal 3Q11, ended December 31. Sales during the same period jumped 31.1% to US$2.14bn.