Home > Uncategorized > TCS looking for acquisitions in healthcare in Japan, Germany

TCS looking for acquisitions in healthcare in Japan, Germany

Looking beyond its core market in the United States, Tata Consultancy Services , the largest software export firm in India, is looking for further acquisitions in the healthcare sector in Japan and Germany.

According to a latest report in a business website, TCS as well as its rivals Infosys Technologies and Wipro, the second and third largest Indian IT firms respectively, have been eyeing acquisitions abroad with a view to heighten growth in the midst of increasing competition from multinational business rivals, for instance, Accenture and IBM.

The report says that in an interview with Reuters, TCS chief executive officer and managing director Natarajan Chandrashekaran said that they want to consider prospects for getting a number of strategic competences, irrespective of them being in platforms or in the markets. While TCS has cash worth around $2 billion, Chandrashekaran said that no specific amount has been kept in reserve for the proposed acquisitions.

At the same time, the TCS chief said that his company desires to witness marginal improvement in pricing for the current fiscal year that commenced from April 1, 2011 and is expecting to maintain the existing operating margins. It may be noted that for the fiscal year 2011, which ended on March 31, 2011, TCS posted operating margins to the tune of 27.8 per cent as per the accounting rules in the United States.

Meanwhile, SMC Global Securities head of research Jagannadham Thunuguntla has said that there is a sufficient ground to think that an acquisition ought to prove positive, given that TCS, a Tata Group conglomerate dealing with practically everything from salt to steel, goes in for acquiring skill sets or expand geographies at a logical price.

The Indian IT major, whose clientele includes General Electric (GE) and Citigroup, had recently reported a 23 per cent increase in its profit during the fourth quarter surpassing estimations aided by growing demands. However, at the same time, TCS has highlighted increases in wages as well as the volatility in currency as the major threats to the company’s profit margins for the current fiscal year.

It may be noted here that the $60 billion outsourcing industry in India provides an assortment of services, counting managing computer networks, software coding as well as call centers for foreign firms like BT Group Plc, British Airways and Sony Corp.

According to the independent technology and market research firm Forrester, the technology market in the United States, which comprises the largest market for the Indian tech firms, is expected to grow by 8 per cent during 2011, an increase of 7.4 per cent from the earlier estimates. The research firm has further forecast that this would be possible as the software, technology outsourcing and IT consultancy services are growing more rapidly compared to the previous year.

Keeping this in view, Chandrasekaran has said that TCS anticipates a strong demand in outsourcing services from overseas customer. At the same time, he pointed out that the ambiguity in the global financial environment requires to be watched keenly.

Regards,
Venkatesh .K

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