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TCS Profit Up 44%, Beats F'cast

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Tata Consultancy Services Ltd (TCS), India's largest software services exporter, posted a 44 per cent rise in quarterly profit, beating expectations, as more overseas clients turned to its outsourcing services to cut costs.

Net profit for the three months ended September rose to Rs 3,512 crore from Rs 2,439 crore a year earlier, TCS said. Analysts had forecast a profit of Rs 3,334 crore, according to Thomson Reuters estimates.

The global wave of cost-cutting is benefiting India's $100 billion-a-year information technology and back-office services sector, which earns some three-quarters of its revenue from exports to the United States and Europe.

"We have done very well, and we look optimistic," CEO N. Chandrasekaran told reporters.

He said he was also seeing a return of some discretionary spending, which is typically for longer term projects by clients and is an indicator of the health of the industry.

TCS also named Rajesh Gopinathan as CFO, when incumbent S Mahalingam retires, according to a post by the company on the microblogging site Twitter. India's largest software services exporter added 41 clients and 10,531 staff in the September quarter, the company said.

Fierce competition and rising operating costs have eroded the bottom line of some Indian IT services firms, including second-ranked Infosys Ltd.

Last week, Infosys reported weaker-than-expected margins for the quarter ended September 30. The former bellwether for India's IT sector also disappointed investors hoping for a more robust growth outlook.

By contrast, smaller rival HCL Technologies Ltd reported a 78 per cent jump on 17 October in quarterly profit after securing large overseas contracts.

TCS, part of the Tata Group conglomerate that also manufactures cars and steel, serves customers including Citigroup Inc and BP Plc.

The company does not provide detailed forecasts, but has said it expects to beat the industry export revenue growth forecast of 11-14 per cent this fiscal year set by trade body National Association of Software and Service Companies or Nasscom.

"We've said that we'll be ahead of NASSCOM, we'll be delivering on that and we're on course," Chandrasekaran said.