>TCS (ICICI Securities)

TATA CONSULTANCY SERVICES

# Non-discretionary volume under some pressure. TCS is witnessing ramp-down
requests from some clients in Auto and Telecom verticals, with lower number of
support hours for maintaining systems. Though such requests are limited, it can be
inferred that the demand downside is not behind us. However, project cancellations
have not increased versus that in Q3FY09, with the start of new deals won in
Q3FY09. Retail vertical has been showing better signs of outsourcing.

# Delay in ’09 IT budget with increased discussion on pricing. TCS expects ’09 IT
budget finalisation to be delayed by two months versus the earlier expectation of
January ’09. The company is witnessing increased requests for rate decline, which
may result in like-to-like billing rate cut as the upside to non-linear execution model
may be limited (fixed price contribution at 45.5%, the highest among peers).

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