Tata Consultancy Sees More Demand at Citigroup, Banks

July 20 (Bloomberg) -- Tata Consultancy Services Ltd., India’s largest computer-services provider, is seeing increased demand from financial clients including Citigroup Inc., Chief Executive Officer Subramanian Ramadorai said.

“Demand is increasing as we speak,” Ramadorai said of business from Citigroup. JPMorgan Chase & Co. and Bank of America Corp. were also interested in services from Tata Consultancy, the chief executive said in a Bloomberg Television interview today.

Increased orders from financial services companies, Tata Consultancy’s biggest source of revenue, may help Indian outsourcers recover from the global recession that’s forced companies to tighten their technology-spending budgets. Cost cuts including a pay freeze and a cap on hiring helped Tata Consultancy beat earnings expectations July 17, joining nearest rival Infosys Technologies Ltd.

“Some segments where it was looking quite bad till recently, I think the situation is getting much better,” said Apurva Shah, head of research at Mumbai-based Prabhudas Lilladher Pvt., which raised its rating on the stock to “accumulate” from “reduce” after the results.

Tata Consultancy climbed 12 percent to 484.25 rupees at 10 a.m. in Mumbai trading, its biggest increase since May 18 after the company reported earnings that beat analyst estimates on July 17. The stock was the second-biggest contributor to the benchmark Sensitive Index’s 1.5 percent advance and the biggest gainer today on the 967-member MSCI AC Asia Pacific Index.

Profit Beats Estimates

The Mumbai-based software provider last week reported net income rose 23 percent to 15.2 billion rupees ($312 million) in the three months ended June 30. That compared with the 12.9 billion-rupee median of 21 estimates compiled by Bloomberg.

Sales rose to 72.1 billion rupees, beating the median analyst estimate of 69.2 billion rupees, after Tata Consultancy won eight large deals, including five from companies in the U.S. Banks and financial firms contributed 44 percent of revenue.

Ramadorai said demand from banks was across geographies.

“Other banks are looking at rationalization, some of the consolidation with the mergers that took place, some of the compliance related activities,” he said. “Banks in the European parts of the world in addition to the Indian banks,” were also interested in hiring Tata Consultancy, Ramadorai said.

Tata Consultancy, which provides computer services and back-office support to Citigroup, Volkswagen AG and other customers, said it won a multimillion dollar order from a specialty retailer in the U.S., where it gets half its sales. The Indian company also signed a multi-year contract with an Australian energy retailer for managing software applications.

The share of revenue from Tata Consultancy’s 10 biggest customers rose to 28 percent in the quarter, from 26.9 percent in the preceding three months, the company said in a presentation to analysts and posted on its Web site.