TCS expects revival to start from BFSI sector

Written by Rachana Khanzode | Mumbai | Updated: Jul 22 2009, 05:21am hrs
In the midst of the gloomy economic environment, Tata Consultancy Services (TCS) says the road to recovery will start from the banking, financial services & insurance (BFSI) sector across the US, Europe & the UK.

However, the company isnt sure of the timeline and still wants to wait and watch at least for the next three-five months, when it feels the economic situation will start to stabilise.

For the first quarter, the BFSI segment contributed 43.9% to the overall revenues, up from 42.5% in the same quarter last year. The US continues to contribute the largest with 56.9% and Europe & UK together contributed 27.9% of the revenues. Addressing the media during the results announcement, TCS had said the BFSI sector has witnessed some growth from the US market. TCS business volume grew 3.5% sequentially in the April-June period.

Surya Kant, president-North America, TCS, says, It remains to be seen if the growth witnessed from this sector would be sustainable or not in the coming quarters. We need to ensure we cut down on costs for our BFSI clients and increase productivity. A lot of consolidation in the US banking sector has happened. At the same time, companies are under pressure to be profitable. According to Kant, last six months had seen a turnaround, with a number of decision-making individuals in this sector moving out and new people coming in. Now, since a number of such people had come in place, we saw some improvement in this quarter. At the same time, stability in the BFSI market with large banks coming out with positive quarterly numbers is giving us hope out there, he adds.

AS Lakshminarayanan, vice-president & head, Europe, of the company also views that the banking sector will revive first. We expect a number of opportunities in the medium to long term. The capex for sectors like utility and energy has been finalised and now we are expecting them to come out of the downturn. Besides this, the retail sector is fighting for a market share.

TCS is also in discussion with prospective clients in sectors like pharma, energy & utility and healthcare.

TCS shares closed at Rs 500.10 on the Bombay Stock Exchange on Monday, up 15.34%, and at Rs 500.55 on the National Stock Exchange, up 15.31%. The market reacted positive to the company's first-quarter results declared Friday. TCS posted a net profit of Rs 1,534 crore, up 15% quarter-on-quarter and 19% year-on-year.