TCS sees investments in digital technologies driving growth

By Nivedita Bhattacharjee and Aman Shah

MUMBAI (Reuters) - India's largest software services exporter, Tata Consultancy Services, on Thursday posted better than expected quarterly net profit and said it would increase investments in digital services to meet faster adoption by clients.

India's information technology firms have in recent months moved towards higher value services and are focusing on digital technologies to cater to customers increasingly seeking expertise in areas like automation and artificial intelligence.

"Given the strong pipeline and market adoption of digital across industries, we are investing to train over 100,000 professionals this year in all relevant technologies, CEO N. Chandrasekaran said in a statement.

The digital segment contributed about 12.5 percent to the company's consolidated annual revenue, he added.

TCS, the biggest company by market value in India's $146 billion IT outsourcing industry, said net profit rose 13 percent to 57.09 billion rupees ($900 million) for its fiscal first quarter to June 30, higher than analysts estimates of 54.40 billion rupees.

TCS, part of India's diversified Tata Group, said the current situation in Greece and China did not pose any immediate concerns for the company. TCS makes close to a fifth of its revenue from Europe.

Revenue rose 16.1 percent from a year earlier to 256.68 billion rupees. Sequentially, the company's revenue rose 6 percent, slightly above analyst expectations of 5.3 percent.

The Mumbai-based company attributed growth in the quarter to strong demand from North America and greater traction for TCS's digital solutions in areas like financial services, retail and life sciences.

Typically, Indian IT services companies see better revenue growth during the first two fiscal quarters, when client spending tends to rise as compared to the second half of the fiscal year.

Shares of the company closed down 2.8 percent before the results on Thursday, while the broader Mumbai market was down 0.41 percent. ($1 = 63.4100 rupees)

(Additional reporting by Devidutta Tripathy; Editing by Sunil Nair)