ndias largest software exporter by revenue has restored investor confidence in the technology sector by reporting robust quarterly

earnings.

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Tata Consultancy Services Chief Executive Officer and Managing Director Natarajan Chandrasekaran at a press conference in Mumbai, April 19, 2010.

Shares of Tata Consultancy Services surged 5.7% to a near three-month high of 828.65 rupees Friday after the company reported a 21.3% rise in net profit for the quarter ended June 30, helped by strong sales growth and effective cost control measures. The benchmark Sensex was up 0.2%, while the BSE IT sector, which had been tepid since Infosys Technologies Tuesday reported disappointing quarterly results, rose 1.6%. TCS results have shown that there is nothing fundamentally concerning in the demand environment, brokerage CLSA noted. We believe revenues will continue to surprise on the upside for (large) Indian IT vendors through fiscal 2011. The companys performance has also brought up a key question: Whats TCS doing right that Infosys is not? Both companies are grappling with high employee wages. But profit margins at TCS slid only 0.36 percentage point from the previous quarter while those of Infosys slipped 1.80 percentage points. Analysts say the discrepancy is mainly due to better management of overhead and wage costs by TCS. Analysts also believe TCS attributes such as the strength of its business model, diverse lines of business and presence in India and emerging markets could give it an edge over Infosys in the coming quarters as well. This in addition to the benefit the entire sector is going to see from the receding concerns of a slowdown in the Europe and U.K. markets. Also, TCS has fared better

than Infosys when it comes to bagging big ticket orders, with Edelweiss estimating that TCS won 10 large deals between April and June while Infosys won only two. One wonders how long it will be before TCS replaces Infosys as the face of Indias flourishing technology sector.

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