(Repeats story issued late on Monday)
* Expects prices for services to rise later in FY11
* Profit up 47 pct to 19.3 bln rupees vs 18.1 bln estimates
* Shares end down 0.4 pct ahead of earnings in weak market
(Adds details from news conference)
By Pratish Narayanan
MUMBAI, April 19 (Reuters) - India's Tata Consultancy Services (TCS.BO) posted its best quarterly growth in three years on a rebound in technology spending and expects fees to rise this year, galvanising hopes of a recovery in the sector.
India's top software services exporter said it was seeing demand for outsourcing growth across its key industrial sectors including financial services, retail and manufacturing, but a rising rupee was a concern. "It's been a good quarter which marks the turning around of all the verticals we operate in," CEO N. Chandrasekaran told a news conference on Monday.
"We continue to have a healthy pipeline...In terms of increase in pricing, it may not come in the immediate quarters but we hope to see some increase in the second half of FY11," he said, referring to this fiscal year that ends in March 2011.
A global economy on the mend, recent deal wins and stable fees have brightened the outlook for export-driven Indian IT firms such as Tata Consultancy and rival Infosys Technologies (INFY.BO), after the world recession hit the sector.
India's No. 2 exporter Infosys' stronger-than-expected annual sales forecast last week suggested a gradual recovery for India's $60-billion software services sector, though a stronger rupee and higher pay could check profit growth. [nSGE63B06V]
Ahead of the announcement, shares in Tata Consultancy, which provides services such as consulting, systems integration and back-office outsourcing, ended down 0.4 percent at 811.85 rupees in a Mumbai market .BSESN that fell 1.1 percent.
Tata Consultancy posted a 47-percent rise in quarterly net profit, beating street estimates and recording its best quarterly profit growth since the January-March quarter of the fiscal year 2006/07.
The company, part of the Tata Group that spans the commodities, autos and services businesses, said on Monday net profit in the March quarter rose to 19.3 billion rupees ($432 million) from 13.1 billion rupees a year ago under U.S. accounting rules.
A Reuters poll had forecast a net profit of 18.09 billion rupees for the firm which counts Citigroup (C.N), General Electric (GE.N), General Motors, Lloyds TSB (LLOY.L), Ferrari and American International Group (AIG.N) among its clients.
Tata Consultancy and its local rivals have revived hiring and are competing for staff and orders with IBM (IBM.N) and Accenture (ACN.N), signalling a recovery in the sector that has been reeling under price cuts and slowdown in new deal wins.
But a stronger rupee thanks to more foreign investment in India, and pay raises could hit outsourcers, who earn much of their revenue in dollars, but primarily spend in rupees.
Chief Financial Officer S. Mahalingam said that the firmer rupee was a "problem" for Tata Consultancy, after a 3.6 percent rise in the rupee dented its profit margins by 1.9 percent in the March quarter.
Tata Consultancy, which added 10,110 staff in the latest quarter, will raise wages for its India-based employees by 10-13 percent in this fiscal year, Chandrasekaran said, as the company seeks to prevent engineers from joining rivals.
(Writing by Sumeet Chatterjee; Editing by David Cowell)
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