Conditions clearer, decline has been arrested: TCS

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Bangalore: Sounding optimistic, a top executive of the country's biggest software exporter TCS today said decline in global demand for outsourcing has been 'arrested.' “The conditions now are little clearer, in a sense decline in terms of demand that was seen earlier appears to have been arrested”, S Mahalingam, Executive Director and CFO, Tata Consultancy Services told reporters here.

To a question about the specific area in which the decline has been arrested,he said it was in project cancellations.

Decline which was significant by September has been arrested 'but whether it will turn into a plateau period, a flat demand,take a U-shape recovery has to be watched,'he said “The budgets (of companies) are reasonably clearer”, he said but “it is lower than what it would have been otherwise”.

He said firms were cautious in terms of “discretionary spending” and the move was towards offshoring, but added “that does not mean there is an (offshoring) trend”.

On TCS' diversification strategy, he said the firm has a presence in many verticals. Sectors like pharma, retail have shown some upward trend.

On diversification, he said the company was expecting growth from emerging markets “over a period of time”.

About 'deal conversion', he said 'there is a positive sentiment in terms of deal flow. It has been on the same space as a year back,' he said. “The pipeline is building alright but we have to watch in terms of actual conversions”.TCS 2LST(MCM45) Mahalingam said during this critical time, the company was focussing on cost management which involved employee cost, infrastructure and other costs like travel, communication and internal software use. “We have been reasonably successful”.

“Cost Management will continue to be our focus”, he said, adding the objective was to scale down the selling and administrative cost from 21 percent to 19 percent.

Post-Lok Sabha elections,he said “sentiment is extremely postive” and added TCS was looking optimistically at the domestic market.

To a query whether pricing pressures had come down, he said it would take some time to reply in the positive to it.

On its acquisition relating to CITI Corp BPO, he said the integration had been smooth. “It has brought in phenomenal amount of domain capability”.