Tata Consultancy to Expand in China on Surging Asian Growth

Tata Consultancy Services Ltd. (TCS), India’s largest software services exporter, will hire more workers in China as growth in Asia outpaces that of the Americas, the company’s biggest by sales.

Revenue growth from Asia-Pacific will probably exceed the Mumbai-based company’s overall rate this year, Vish Iyer, president for the region, said in an interview at Bloomberg’s Singapore office yesterday. Tata will “significantly” increase headcount in China from its current 3,000 people, he said, without elaborating.

Competition between Chinese cities presents an “immediate opportunity” for companies such as Tata, which vies with International Business Machines Corp. (IBM) and Accenture Plc (ACN) globally for outsourcing contracts. Indian software companies are also turning to China, the Philippines and Eastern Europe because of a dearth of talent at home, Forrester Research said last year.

“We all know China is where the spending is taking place,” said Iyer. “China is where the mayors are fronting healthy competition between some 20 cities. They want to say ‘I’m better than the next guy.’ I think there’s an immediate opportunity.”

The company’s shares fell 0.2 percent to 1,316.60 rupees as of 12:08 p.m. in Mumbai trading, trimming the gains this year to 13 percent. The benchmark BSE India Sensitive Index (SENSEX) has advanced 21 percent.

Revenue from Asia-Pacific as a share of the total has increased for Tata in each of the past three years, according to data compiled by Bloomberg. The region accounted for 7.56 percent of revenue in the fiscal year ended in March compared with 6.60 percent a year before.

Americas Contribution

Contribution from the Americas -- North America and South America combined -- declined to 56.39 percent from 57.50 percent a year before, according to Bloomberg data.

Tata’s closest local rival Infosys Ltd. (INFO) is also expanding into China. The Bangalore-based company said in May last year it plans to add as many as 4,000 employees in Shanghai in 18 months. The company will spend $130 million to build a new office, then- chief operating officer S.D. Shibulal had said. Shibulal is now the chief executive officer of Infosys.

“The emerging markets are obviously going to show a good growth for IT companies as multinational corporations are expanding there,” said Pankaj Kapoor, an equity analyst at Standard Chartered Bank in Mumbai. “Also, many of these countries have home-grown enterprises which are now reaching global scales.”

Growth Forecast

Tata’s sales growth will be higher than the forecast made by the National Association of Software & Services Companies, Chief Executive Officer Natarajan Chandrasekaran said in July. The association has predicted industrywide revenue growth of as much as 14 percent in the year ending March 31.

Tata has a product that is used by Bank of China Ltd. in over 40 provinces and provides health-care data using cloud services, Iyer said.

“The best bet for us is to combine local talent and the global talent,” Iyer said. “In addition, countries like Philippines and China have talents groomed for export.”

To contact the reporters on this story: Sharon Chen in Singapore at schen462@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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