* Q1 net profit at 50.58 bln rupees vs 48.86 bln estimates
* Digital tech multi-billion dlr opportunity for sector-CEO
* Company looks to bid for at least 8 outsourcing deals-CEO
* Shares end down 0.8 percent ahead of the result
(Adds company's plan for new technology services, executive and
By Aman Shah and Nivedita Bhattacharjee
MUMBAI, July 17 Tata Consultancy Services Ltd
, India's biggest software services exporter, is
investing in new technologies such as cloud computing, joining
rival Infosys Ltd in chasing high-margin outsourcing
contracts to respond to growing competition.
"You'll never see a $100 million deal but there will be lots
of smaller deals adding up to a digital initiative which will be
larger," TCS Chief Executive N. Chandrasekaran said, after the
company reported a 26.9 percent rise in quarterly profit.
He said digital technology, which includes cloud computing
and mobile applications, was a "multi-billion dollar
opportunity" for IT outsourcing services providers.
Growing competition and slowing growth has forced India's
outsourcing companies, which had thrived for decades by writing
software codes and providing IT infrastructure services, to look
to higher margin services to increase revenues.
Research firm Gartner this month cut the worldwide IT
spending growth outlook for 2014 to 2.1 percent from an earlier
estimate of 3.2 percent due to lack of product differentiation
and availability of "viable alternative solutions."
Infosys, India's second-largest IT services exporter, last
week said it would boost investment in cloud computing,
smartphone apps and other new technologies to win more
high-margin outsourcing contracts.
"I don't think anyone can afford to stay out of this sector.
Digital has grown bigger than what the industry thought it would
be, with all sectors getting into it," Ravi Menon, IT sector
analyst with Mumbai-based Centrum Broking, said.
Retail, wealth management and banking are considered the
frontrunners in the push for digitisation, as their customers do
more business transactions over smartphones and tablets.
PROFIT UP, PIPELINE STRONG
TCS's consolidated net profit for the three months to June
30, its financial first quarter, rose to 50.58 billion rupees
($840.5 million) from 39.87 billion rupees a year ago, the
Mumbai-based company said on Thursday.
That compares with analyst estimates of 48.86 billion
rupees, according to Thomson Reuters data.
Revenue rose 22.9 percent to 221.11 billion rupees.
TCS, which counts Cisco and Hewlett-Packard
among its clients, has increased profit over the last two years
at a faster pace than rivals Infosys and Wipro Ltd,
which have both had internal management changes.
The Mumbai-based firm is estimated to post revenue growth of
16 percent in the next 12 months, compared with Infosys' 8.3
percent and Wipro's 9.9 percent, according to Thomson Reuters
TCS, which does not provide any earnings forecast, said on
Thursday fiscal 2015 that started on April 1 would be a better
year than the last year, with the company looking to bid for at
least 8 large outsourcing deals.
The company, which gets more than three-quarters of its
revenue from the United States and Europe, said business volume
grew 5.7 percent, led by a growth in North America, Europe,
India and the Asia-Pacific region.
Shares in TCS, a unit of India's Tata conglomerate, closed
0.8 percent lower at 2,381.95 rupees before the announcement.
The main Mumbai market index ended up 0.2 percent.
($1 = 60.1800 Indian Rupees)
(Additional reporting by Patturaja Murugaboopathy in BANGALORE;
Editing by Pravin Char and Jane Merriman)