Even though competition is intensifying as customers seek cost reductions, Tata's earnings in fiscal 2010 should be higher than the year earlier, Chief Executive S. Ramadorai told Reuters in a telephone interview after Tata announced profits that fell short of expectations.
"I would like to see a 10 percent year-on-year improvement" in cost reduction, he said.Tata Consultancy Services Ltd posted a 4.6 percent rise in quarterly profit, but it expects prices to fall by lower single digits in the coming year.
"Profits will continue to rise, but at a slow pace," he said. "That is what we hope."The challenges are definitely cost rationalisation and offshore leveraging," Ramadorai added.Despite the pressure on prices, he said the company would try to avoid being drawn into a price war with competitors.
"Growth has come down dramatically from what we were used to... So automatically, the focus of the organisation has been on looking at our internal efficiencies," Ramadorai said.Prices of IT outsourcing services will shrink 5 percent to 20 percent through 2010 due to the uncertain economic climate, IT budget constraints and competition between vendors, research company Gartner predicted last month.
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