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IBM’s results raise hopes for Indian IT firms like Infosys, TCS

IBM raised its full-year outlook based on cost cutting and a strong software pipeline, raising hopes for better performance from its Indian outsourcing rivals. IBM beat second-quarter earnings estimates thanks to growth in its mainframe and software units, but missed on revenue.

IBM raised its full-year outlook based on cost cutting and a strong software pipeline, raising hopes for better performance from its Indian outsourcing rivals. IBM beat second-quarter earnings estimates thanks to growth in its mainframe and software units, but missed on revenue.

New outsourcing signing at IBM rose $ 8.9 bn up 31% in constant currency and transactional signings rose by 14% $ 7.5 bn. IBM Chairman and CEO Ginni Rometty said the company had significantly increased its services backlog on growth in new business. The services backlog was up 7% in constant currency to $141 billion, the strongest growth the company has seen in four years. IBM signed 15 deals over $100 million and multi-billion dollar deal in the second quarter.

“This was a healthy quarter from IBM, with some recovery in growth for software and services supported by a strong order backlog. Management has indicated an improving outlook for services. From an Indian IT perspective, the read-across is positive and we maintain our preference for large-caps – Infy, TCS are our top picks,” Religare analyst Rumit Duggar said in a note to clients.

Tata Consultancy Services, India’s largest IT outsourcing company, is slated to report fiscal first-quarter results later on Thursday. Analysts expect TCS to grow its revenue, as reported in dollars, by 3-4%.  Number two players in the sector, reported stronger-than-expected revenue for the April-June quarter, last week.

[Source: The Economic Times]
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