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Merger route for TCS growth

Calcutta, Sept. 30: The Rs 4,187-crore Tata Consultancy Services (TCS) has adopted the acquisition and merger route to maintain its year-on-year growth rate. The services major registered a topline growth of around 34 per cent for 2001-02 despite the slowdown in the technology sector. TCS has already set up a dedicated cell that will look into planning and strategies related to acquisitions and mergers, both in the domestic and international market. Besides driving inorganic growth, acquisitions will also help TCS acquire new technology and new vertical segments.

“We have been doubling our revenues every two years,” vice-president for corporate communications Atul Takle said. “It is extremely difficult to maintain this growth without expanding into new market segments. We are therefore scouting for companies that complement our business interests and will help us leverage our strengths in the market.”

The acquisition of CMC last year helped TCS to enter areas like ports and shipping, embedded systems and government sectors like railways. The software major is presently in the process of integrating CMC into the TCS culture. It has identified finance, sales and marketing and human resources and product integration as the main areas of focus. CMC has also added to the basket of TCS products it expertise in network and infrastructure maintenance and its experience in power and utilities.

“The acquisition of CMC helped us expand into the domestic market,” adds Takle. Along with CMC, the company has a turnover of close to $ 1 billion. “We were already strong in the domestic market and would like to consolidate this position.”

Of the total revenues, exports accounted for Rs 3,882 crore in 2001-2002 as against Rs 2,870 crore last year. “Almost 75 per cent of our business is from repeat clients. Presently, we have around 1,000 clients world-wide, of which 200 were acquired in the last six months,” Takle said.

He was optimistic that the systems integration market would offer huge opportunities due to the spate of acquisitions and mergers world-wide.

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