Date:27/07/2004 URL: http://www.thehindubusinessline.com/2004/07/27/stories/2004072702480700.htm

Back TCS prefers more fixed priced deals

Our Bureau

Bangalore , July 26

TATA Consultancy Services (TCS) said it aims to sign more fixed price projects as it expects to increase productivity from such projects to boost operating margins.

Fixed price projects accounted for 55.5 per cent of TCS' April-June quarter global revenue in the current fiscal, said the Executive Vice-President and Head of Global Corporate affairs, Mr Phiroze Vandrevala.

The company, which will offer its shares for sale on Thursday, said its operating margins for the first quarter were 27.7 per cent.

Its manpower utilisation rate was close to 77 per cent and the company expects to hike productivity with better utilisation.

However, its plan to increase the share of fixed priced projects was independent of the improving pricing environment witnessed across the services industry, Mr Vandrevala said. "It's only that we will manage to squeeze better value out of it, since there will some significant offshore component in some end-to-end solution projects," he added.

The company derives close to 48 per cent of its revenues from offshore activities while the remaining 52 per cent comes from onsite engagements.

"We hope to increase the offshore component going forward," Mr Vandrevala said.

TCS said that it has bought forward covers for its receivables for the next six months and has taken a forex fluctuation hit in its first quarter. However, it did not detail such exchange loss.

With the rupee softening against the dollar, the company expects a five per cent boost in its revenue earnings as its receivables are adequately hedged.