UPDATE 1-India Tata Consultancy Q3 net up, sees tough market

MUMBAI, Jan 15 - India's Tata Consultancy Services Ltd <TCS.BO> posted a lower-than-expected rise in quarterly profit and said market conditions were tough as global economic turmoil crimps outsourcing demand and puts pressure on fees.

India's largest outsourcing firm said while it was not trying to poach clients from fourth-ranked Satyam Computer Services <SATY.BO>, whose former chairman quit last week after revealing overstated profits and fictitious assets, but said approaches had been made to it.

"We are not in talks with their clients actively. The question was, whether they are calling us. They definitely are," chief operating officer N. Chandrasekaran said on Thursday.

Chief executive S. Ramadorai told a news conference that Satyam's problem were company-specific and would not otherwise affect the $52 billion IT services sector, which was already facing tough times.

"These are difficult times with regard to the market conditions," Ramadorai said. "Almost all sectors are facing stress, almost all geographies are facing problems."

Indian outsourcers such as Tata Consultancy and Infosys Technologies <INFY.BO> have benefitted from an army of English-speaking workers and relatively cheap wages, winning deals from mostly U.S. clients.

But the party ended last year after a turmoil in the key financial sector and as recession hits major global economies.

Chandrasekaran said the company, which added 41 new customers in the December quarter to take its tally to 965, saw a healthy deal pipeline, but decision making by its clients may be delayed.

TCS, part of the Tata Group that spans autos, commodities and services businesses, said net profit rose 1.6 percent to 13.52 billion rupees ($276 million) in Oct-Dec from 13.31 billion rupees a year ago, under U.S. accounting rules.

A Reuters poll of brokerages had forecast net profit of 14.13 billion rupees for the company which counts Citigroup <C.N>, General Electric <GE.N> and ABN AMRO among its main clients.

On Tuesday, rival Infosys Technologies <INFY.BO> beat market expectations with a one-third jump in quarterly profit but trimmed its annual forecast. [ID:nBOM259894]

Nortel Networks <NT.TO><NT.N>, a client of Tata Consultancy and Infosys filed for bankruptcy on Wednesday, adding to the glum outlook.

Chandrasekaran said the telecom equipment maker accounted for less than half a percent of its annual revenue, joining its rivals who have also said the bankruptcy filing would not have any significant impact on their revenue.

Ahead of the announcement, shares in Tata Consultancy ended 5.3 percent lower at 510 rupees.

Shares in Tata Consultancy, which provides consulting services and integrates IT systems, shed 28 percent in the December quarter, in line with the sector index <.BSEIT>. ($1=49 rupees)