With the US market recovering fast and a positive turn in business environment, Tata Consultancy Services (TCS) sees increase in pricing that might be more visible in the financial year 2011-12.
The company said it was negotiating for at least 20 large deals. For TCS, a deal is large when it is contracted for years with a $50-million tag.
“The demand is increasing in sectors like BFSI (banking, financial services and insurance) and retail. After six quarters, we are seeing increase in pricing with the demand growing,” Mr N. Chandrasekharan, Managing Director and Chief Executive Officer, said.
Addressing a press conference here on Tuesday on the sidelines of the 20th World Wide Web conference, he said opportunities were improving in areas like compliance and analytics. “Discretionary spend in the business environment was turning positive. The US is recovering fast but Europe is lagging. We expect a better growth rate there,” he said.
The domestic market, however, would continue to contribute 8-12 per cent. “We don't see any increase in the pie if we keep in mind the size of the overall domestic market,” he said.
He said the company registered an attrition rate of 12-14 per cent, far lower than the industry's average. While the IT division's attrition rate was 12 per cent, the BPO business had a much higher rate, bringing the average to 12-14 per cent. “We would like to bring this down further,” he said, without indicating a number.
He said the company has been able to improve operating margins by 500 basis points in the last 6-8 quarters. “We are operating at the best margin levels.”
Cost advantage to stay
Mr Chandrasekharan asserted that India would continue to have an edge as far as cost advantage was concerned. “It is not just about cost. Issues like quality, availability of talent, ability to manage and deliver hold the key. I think holistically we will still have that edge,” he said.
Replying to a question on acquisitions, he said the company would acquire businesses to strengthen growth. “We will look at adding strengths in sectors like healthcare. There is nothing definitive in the near term,” he said.