Tata Consultancy Services expects its loss-making unit in Brazil to turn profitable by the current fiscal end, a top company official said.
“Our Brazil operations have been under stress for some time now but this in line with the larger trend in most emerging markets. The good news is that it is on the turnaround path,” Rajesh Gopinathan, TCS Chief Financial Officer, said. He was speaking to Business Line a day after the company announced its results for the fourth quarter ended March 31, 2014.
Tata Consultancy Services Do Brasil Ltd, the company’s local unit, has been recording net losses for at-least the last five years, an analysis of the parent company’s annual reports between 2008 and 2013 shows. In 2012-13, it posted a net loss of Rs 43.3 crore on a turnover of Rs 215.1 crore. The annual report for 2013-14 has not been released yet, but Gopinathan is optimistic of a better show from the Brazil unit.
Industry analysts say that slowing economic growth has shrunk corporate IT spends in Latin America’s largest economy. The country is still struggling to find its way out of a three-year period of weaker-than-expected industrial output.
As per the company website, TCS’ Brazil operations had started in 2002. It currently employs 1,300 staffers and operates two development centres in Barueri (São Paulo) and Brasilia. Gopinathan said that most of the work in Brazil is done for local customers. The company counts Oi-Brasil Telecom, Grupo OESP and several other Brazilian majors as customers, according to its website.
Indian IT companies have upped their investments in Brazil for several years in a bid to serve local customers and use the country’s prowess as a near shore delivery location. Brazil’s domestic IT market is said to be worth around $25 billion.
Infosys, TCS’ Bangalore based competitor has over 700 staff in Brazil. Last year, the erstwhile Mahindra Satyam (now Tech Mahindra) bought 51 per cent stake in Complex IT, a Sao Paulo-based SAP consultancy firm.