Profits tipped to surge at Indian software giants
Tata Consultancy Services and Infosys Technologies, India's biggest software makers, may report that quarterly profits jumped as much as 55per cent as they added new customers and raised prices for their services.
More Baboo Call Center Thefts will end bust India's BPO boom
Call centre theft may bust India's BPO boom Posted by: freshgreg on Apr 08, 2005 - 09:29 PM A...
Net income at Mumbai-based Tata Consultancy could rise 44per cent in the quarter ended March31 to 6.8billion rupees ($200million), according to the median estimate of 11 analysts surveyed by Bloomberg. Rival Infosys might say profit rose 55per cent to 5.2billion rupees, the fastest pace in almost four years. Earnings at Wipro, the No.3 player, could climb 40per cent.
The three are winning contracts from overseas customers including DHL Express and General Motors because the average wage of their developers is one-sixth of that in the United States.
The Indian companies will probably boost profit by a total of $US120million ($155million) - almost as much as the quarterly increase of their three biggest US rivals - International Business Machines Corp, Electronic Data Systems Corp and Accenture.
"Outsourcing is continuing to be very strong and new customers are paying higher prices," said Arindam Bhattacharjee of US-based Emerging Markets Management.
Indian software companies may have scored an average 3per cent price increase for their services in the year ended March31, mainly from new customers, according to Merrill Lynch analyst Mitali Ghosh.
Bangalore-based Infosys reports today, while rivals including Satyam Computer Services, India's fourth-biggest software developer, are due to report next week.
India's software exports may have grown 32per cent, the fastest rate in four years, in the fiscal year just ended, according to the website of the National buttociation of Software and Services Companies, an industry body.
The estimates given by analysts for Tata Consultancy and Wipro reflect US accounting standards, while the forecasts for Infosys and Satyam are under Indian accounting rules.
India's software makers are having to pay higher wages as they compete with each other for the best workers and with overseas companies.
"Offshore salary hikes are pretty much inescapable," said Mahesh Vaze, a Mumbai-based analyst at Brics Securities, in a report dated April4. "This could fuel concerns on profitability pressures."
For Indian software companies, salaries are the equivalent of about half of their sales.
Satyam raised salaries by as much as 20per cent in October, while Wipro increased pay by as much as 18per cent in the same month.
Pay increases were still the biggest concern for earnings growth, said Emerging Markets' Mr Bhattacharjee.
Alt Computer Consultants from Newsgroups/p>