Buybacks no panacea

IT majors should find better ways to use the cash

The decision of Tata Consultancy Services (TCS) to buy back its shares will be welcomed by a section of shareholders who can exit at a profit. At least two of TCS’ peers, Infosys and Wipro, have also hinted that a buyback decision could come in the near future. In general, as a tool to reward shareholders, buybacks seem to be gaining currency after last year’s additional tax on dividends above a threshold. But the record shows buybacks are not efficient in lifting share prices over the medium- and long-terms and can, at best, provide a short-term gain. For example, the