TCS rules out merger with CMC

The country's largest software exporter Tata Consultancy Services Ltd (TCS) will not merge its subsidiary CMC Ltd. with itself, chief executive officer and managing director S. Ramadorai said Wednesday.

"CMC is clearly focusing on value-added services. Its equipment business is a low-margin game and it's going to go lower and lower as CMC focuses on services and globalisation gateways," he told reporters at a press conference after announcing TCS' July-September earnings.

"CMC will stand on its own legs," Ramadorai said.

In August, TCS chairman Rata Tata had said the company was open to merging all its group technology companies. TCS was listed on the Indian bourses on Aug. 25.

According to Ramadorai, all the global development centres, especially those in Uruguay, Brazil, Hungary and China are gaining momentum and TCS continues to see robust growth in all geographies.

In July-September, Indian operations accounted for 11.72 per cent of total revenues and the company hopes to see a rise in domestic business in future, he said.

Of TCS' revenues in July-September, 59.7 per cent came from the Americas, Europe contributed 22.79 per cent, while 5.74 per cent came from the rest of the world.

Income from banking, financial services and insurance continued to be the highest revenue contributor at 37.3 per cent in July-September, followed by manufacturing at 19.6 per cent, and 17.3 per cent from telecommunications.

Life Sciences and health, retail and distribution, transportation, energy and utilities and others contributed 4.1 per cent, 6.8 per cent, 4.1 per cent, 3.1 per cent and 7.7 per cent, respectively, to revenues.

The new client additions in July-September included three for remote infrastructure management services and six clients in BPO services.

Two major European banks also chose TCS' total banking solution, Quartz, as their banking platform, Ramadorai said.

TCS also started offering "process consulting' under its value engines initiative and offered this service to 17 clients, including three new clients, he said.

As regards the delivery location, TCS' revenues from onsite work decreased to 62.50 per cent from 63.10 per cent quarter-on-quarter, while offshore work rose to 37.5 per cent from 36.90 per cent.

Top 10 clients of TCS contributed 33.6 per cent to July-September revenues as against 35.2 per cent in the previous quarter.

Revenue from repeat business in July-September was 96.10 per cent, while that from new business was 3.9 per cent.

S Padmanabhan, executive vice-president, global HRD, TCS, said the company has also started implementing differential salaries based on technology expertise to employees with similar experience.

The company is also planning to expand its current software development centre at Bangalore, which has nearly 4,500 employees, Padmanabhan said.

On Tuesday, Tata Consultancy Services shares closed at Rs 1,085.05 on the Bombay Stock Exchange, down 0.40 per cent over Monday.