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Business trends

India IT back on track as Tata and HCL mark double-digit growth

Strong quarterly earnings point to the sector returning to its glory days

Some analysts see signs of a revival in India's once-robust IT outsourcing sector.   © Reuters

MUMBAI -- Two of India's largest tech services providers posted double-digit gains in sales during the most recent quarter -- a sign that the sector could return to its heyday of rapid growth.

Third-ranked HCL Technologies saw revenue jump 11% from a year earlier to $2.2 billion for the three months ended December, topping the 9% bounce in the July-September period.

Sales in every one of HCL's global operating regions, including the U.S. and Europe, climbed by at least 10%, with strong orders in cutting-edge fields such as the internet of things, data analysis and information security. Net profit rose 7% to $364 million.

HCL's aggressive acquisition strategy is also contributing to growth. In December, it agreed to purchase seven IBM software products for $1.8 billion in a deal that is due to be finalized by the middle of this year.

Tata Consultancy Services, India's industry leader, booked $5.25 billion in sales last quarter for a 10% gain. TCS has been reporting double-digit revenue increases since the January-March quarter of 2018. Its bottom line also ballooned by double digits, up 13% to $1.14 billion.

Wipro, the No. 4 company, reported sales of $2.05 billion in October-December in its information technology services segment -- just a 4% rise on the year. But the division's net profit surged 38%, with the black ink owing largely to the increased automation of IT work. The segment's operating margin reached 19.8%, expanding from 14.9% a year earlier.

Meanwhile, quarterly earnings at second-place Infosys were mixed. Though revenue advanced 8% on the year to $2.99 billion, net profit plunged 37% to $502 million. On top of added labor and sales costs, the company was battered by a bigger tax bill.

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