Tata Consultancy Expects Operating Margin to Narrow
Author: Kenan Machado</br></br>MUMBAI - Tata Consultancy Services Ltd. expects its operating margin to narrow to about 27%-28% this fiscal year through March 2012 from last year's 28.9%, as higher cost of salaries could dent the profitability of India's largest technology outsourcing company.</br></br>Chief Financial Officer S. Mahalingam said the pace of growth in business volume also won't exceed that of last year because of a higher comparison base. "But, volumes will be good," he said in an interview Monday.</br></br>TCS, part of the salt-to-software Tata group, posted a 29.7% rise in its volume of outsourcing work in the last fiscal year as global businesses, shrugging off the effects of the economic slowdown, continued to invest in technology services.</br></br>It also beat market expectations last week with a 23% jump in its fourth-quarter net profit, driven by higher non-operating income and increased demand for outsourced technology services.