Profitability may continue to elude TCS in China

Adith Charlie Mumbai | Updated on March 12, 2018 Published on July 22, 2014

Tata Consultancy Services’ China operations may continue to be loss making in the near term as it struggles to scale up in a traditionally conservative market for IT services.

However, TCS does not have any plans to wind up operations and is experimenting with novel ways to make the business profitable, said Rajesh Gopinathan, Chief Financial Officer, TCS.

“While TCS is distributed across six locations in China, we are yet to find the sweet spot. We need to ramp up with customers and at different locations, without which profitability will be a challenge,” Gopinathan said.

Three units in China

TCS has three units in China — Tata Information Technology Shanghai Company Ltd (TITSC), TCS (China) and TCS Financial Solutions Beijing Co.

According to the TCS annual report for 2013-14, TCS China and TITSC recorded net losses of ₹18.7 crore and ₹0.53 crore respectively. TCS Financial Solutions Beijing reported a marginal profit of ₹1.23 crore. TCS operates delivery centres in Beijing, Hangzhou, Tianjin, Shanghai, Shenzhen, and Dalian

Key factors

Indian companies eye China for the ability to service operations of multinationals operating in that market; use China as a delivery base for Japan; and tap the growing demand from Chinese firms for IT services.

TCS, which has presence in China since 2002, has been leveraging its units from all three perspectives, albeit with limited success. In fact, the centre in Shenzhen was established with an eye on servicing clients from Hong Kong. However, the projects have not ramped up as expected, said Gopinathan.

“China continues to be a challenging market for us as the market IT outsourcing is still evolving. Most local companies either have in-house IT teams or engage with shared services firms. We are trying to experiment with our positioning and delivery strategy in the market,” said Gopinathan.

Published on July 22, 2014

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.