The Hindu Business Line : TCS buoyed by more biz from top client

RIDING on a buoyant demand environment and order pipeline for offshoring, Tata Consultancy Services (TCS) has recorded a 10 per cent growth in revenue and post-tax earnings in the second quarter ended September 30, 2005.

The significant features of its earnings performance in the latest quarter were:

Client composition: The revenue growth of TCS has been driven by a sharp rev up in the contribution from its largest client. The largest client contributing 5.8 per cent of revenues has grown by over 26 per cent compared to the 2 per cent growth in the two previous quarters.

A similar trend was seen in the Infosys performance in the fourth quarter of 2005, when its largest client had grown by 36 per cent. If we exclude the top client from the top-five clients, the next four clients of TCS have registered a negative growth. However, clients between top five and 10 have grown strongly by 7.9 per cent.

The contribution of GE has come down sequentially to 12.3 per cent from 13.1 per cent.

Nature/type of contracts: The dependence on time and material contracts has gone up this quarter to 49.3 per cent and the management has indicated that it proposes to maintain this proportion between time and material and fixed price.

The contribution of offshore to overall revenues is rising and this trend is expected to continue, as the company has bagged large outsourcing deals in recent quarters.

The increase in the number of clients in the $5, 10 and 20-million bracket is also encouraging.

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