M&S to outsource "over half" of IT to TCS

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Tata Consultancy Services (TCS), which announced its December quarter result on Thursday, beat market estimates.

"We signed our first $50 million plus deal in digital crossing an important milestone in the mainstreaming of digital technologies".

In constant currency terms, however, revenue rose 1.3 per cent, which is less than the 1.7 per cent improvement reported in the previous quarter, but largely in line with expectations for a tame quarter. However, the Q3FY18 net profit witnessed a sequential growth of 1.31% as against net profit of Rs 6,460 crore in the preceding quarter.

Gopinath said smaller industries like energy, utilities and travel and hospitality grew at a "scorching pace" with a 20-25% YoY growth.

Digital revenue, which formed 22.1 per cent of total revenue for the quarter, was up 39.6 per cent year-on-year and up 13.9 per cent quarter-on-quarter.

Tata Consultancy Services managing director & CEO Rajesh Gopinathan said the obsession of benchmarking a company's performance with Nasscom's forecasts do not do justice to the $150-billion IT services industry.

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United Kingdom retail group Marks & Spencer has announced a new technology transformation initiative that will enable it to become a digital first business and deliver an improvement in customer experience - but will also lead to the consolidation of its technology supplier base.

It expects HCL Technologies and Tech Mahindra to lead the pack with 2.7 percent and 1.7 percent QoQ USD revenue growth, respectively, Infosys, Wipro and TCS are estimated to grow at a slower pace of 1.4 percent, 1.4 percent and 0.7 percent, respectively. Approximately 250 of M&S's current 430 IT staff will now be employed by TCS, though will continue to work from the retailer's Stockley Park, London offices, according to a company statement; meanwhile, a spokeswoman said that M&S is "not moving any additional services offshore as a result" of the deal.

To be sure, India's software industry is set to face additional challenges in the US this year, with a new tax being imposed on payments made by USA companies to its foreign affiliates.

The company saw a 0.2 per cent decline in its attrition rate at 11 per cent and added about 1,600 employees during the quarter.

It added that employees transitioning to TCS will be given the opportunity to remain in the same U.S. cities where they are now based.

Rajesh Gopinathan, the CEO and MD of TCS pointed out that Europe is likely to become its second largest market after the USA, sometime in the next four quarters.