Tata Consultancy enjoys 45% profit spike


India has experienced a massive boom in IT operations worldwide, particularly in outsourcing. One of the country's biggest technology consulting groups, Tata Consultancy Services, has experienced a large profit spike recently.

This influx of cash will help TCS formulate and implement a strategy for growth in IT sourcing and digital technology services. It is planning to acquire and partner with several other smaller organizations to make it happen.

The Indian IT consulting company has joined its former rival Infosys Ltd. in a further attempt at swallowing up more profits from sourcing technology services. TCS Chief Executive N. Chandrasekaran told reporters the company won't likely make any $100 million deals, but many other smaller deals are possible leading up to the company's big push for technology service sourcing.

Chandreasekaran and his company will seek out various outsourcing contracts in IT. The opportunities, he believes, in cloud computing and mobile applications (apps) are worth billions. They could be worth hundreds of billions and India is a hotbed of technology-savvy workers who can provide labor at a fraction of the cost of many developed countries' labor sources.

The research firm Gartner reportedly dropped its projections of global IT spending growth outlook for this year to 2.1 percent. That is down from an earlier estimate of 3.2 percent. Gartner reportedly cited a lack of product differentiation and viable available alternatives.

Infosys, meanwhile, stated it would expand its offerings in cloud computing, smartphone apps and other higher-margin outsourcing contracts. This is what its investors are looking for to grow profits to even higher levels.

The pipeline for this revenue couldn't be any more reliable, as analysts point out that banking, retail and virtually every other industry wants in on the digital business opportunities available in cloud and mobile. Cisco and Hewlett-Packard are reportedly clients of TCS, whose profits have signaled growth opportunity for investors.

According to another report from an Indian source, TCS' growth has enabled it to hire nearly 16,000 new employees. The National Association for Software and Service Companies expects the industry as a whole to grow by 13 percent to 15 percent by 2015. 

The company grew in nearly every sector except insurance. TCS has more than 300,000 employees thus far. Continued growth would likely mean even more employment for a company that also reportedly enjoys low attrition rates. The company gets most of its revenue from the United States and Europe.

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