Friday, February 6, 2009

Tough to hit $10-b target by 2010: TCS

Consumer confidence at its lowest in ‘peculiar’ downturn: Ramadorai.

Will the country’s largest software exporter, Tata Consultancy Services, achieve its target of $10 billion in revenues by 2010 as targeted?
“Probably that would be difficult given the current economic environment,” Mr S. Ramadorai, Chief Executive Officer & Managing Director, said in an interaction with Business Line here on Friday. However, he did not give a restated timeframe (for becoming a $10-billion firm) as TCS does not give guidance.
The software major generated $5.7 billion revenues for the fiscal ended March 31 2008. Mr Ratan Tata, Chairman of the Tata Group, had unveiled his ‘Vision 2010’ for TCS at the annual general meeting of TCS’ shareholders in 2006.
Being a $10-billion company would place TCS in the envious league of the top-10 IT companies in the world.
Those were the days when TCS and other players in the IT industry were growing at around 28-30 per cent on a yearly basis, courtesy the increasing IT client spend across industries.
However, the global financial meltdown - that triggered the collapse of several larges institutions such as Lehman Brothers, Bear Stearns and Washington Mutual - has impacted the business of Indian IT companies which generate maximum revenues from the banking and financial services space.
Spend squeeze
And the downturn is not restricted only to the financial services space; even companies in sectors such as automobiles, telecom and manufacturing are clamping down on IT spend because of the financial mess they are in, according to Mr Ramadorai.
Mr Kris Gopalakrishnan, CEO and MD of Infosys Technologies, had said recently that the Indian IT sector would grow by only 15 per cent.
‘Very disturbing’
“This particular downturn is very disturbing as multiple sectors across the world have been impacted. It is a peculiar cycle where suddenly, on a global basis, consumer confidence is at the lowest.
Moreover, the number of jobless people, especially in countries such as the US, is very high,” Mr Ramadorai said.
And even geographies such as Europe, India and Asia Pacific are not immune to the global happenings.
According to a forecast from IDC, worldwide IT spending will grow only by 2.6 per cent year over year in 2009, down from IDC’s pre-crisis forecast of 5.9 per cent growth.
In the US, which is the largest market for Indian vendors, IT spending growth is expected to be 0.9 per cent in 2009, much lower than the 4.2 per cent growth forecast in August.

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