Tata Consultancy Services has reported a 6.1 per cent rise in net profit for the quarter ended September 30, 2011; net profit increase was muted as the company had to cope with reduced prices on outsourcing contracts, forex fluctuations and higher costs.
Pricing on both new and existing contracts was down for the quarter largely due to the uncertain global macroeconomic situation; it had a negative impact of 91 basis points on the company's operating margins.
“Due to the global macro-economic environment, even the scheduled price increases are hard to come by,” said Mr N. Chandrasekaran, Managing Director and CEO.
However, the company has not yet seen any project cancellations or delays in ramp-ups.
“I have been travelling around and meeting customers across markets in the last two months…even though macro economic uncertainties continue and there is lot of negativity, we are getting positive vibes from our customers in terms of their IT spend,” he said.
TCS' India business dipped by five per cent in the last quarter while its Latin American operations grew by only 2.3 per cent. “These two markets are still not operating with the right mix of annuity and discretionary business and hence the volatility,” said Mr Chandrasekaran.
The volatility in Indian rupee, which fluctuated between Rs 43 and Rs 49 during the quarter, caused a Rs 91-crore forex loss to the company, said Mr S. Mahalingam, Chief Financial Officer and Executive Director.