NHS contract delays hit TATA growth

Another commercial player in the National Programme for IT, TATA Consultancy Services (TCS), has reported lower than average financial figures that confirm implementation delays.

TCS, an international outsourcing firm headquartered in Mumbai, India, reported an unusual revenue slowdown in their European operations, which they attributed to delays in implementing core solutions within the NHS.

TCS are partners in the Fujitsu Alliance, local service provider for the Southern cluster, and are responsible for data migration and clinical application implementation. Additionally, TCS have an enterprise-wide arrangement with the National Programme for IT, in which they have agreed to supply consultancy time on data migration, clinical application implementation and systems integration at a reduced rate across all NHS organisations.

N Chandrasekaran, joint vice president of TCS, explained to analysts in a webcast following the announcement of their results: "We are involved in the services side of the NHS contract, and for each of the regions we are involved in, there is a core product customisation, or [a] product configuration and implementation that has to be done by the core product vendor, and there have been delays in that."

Chandrasekaran said that due to the delays in implementation, TCS’s work volumes were comparatively low, although they were still doing design and interface building work.

"Our volume work ramps up once that the product vendor’s work is completed. And, since that is getting delayed, our [revenue] ramp up is getting delayed. That is the story on the NHS."

Chandrasekaran said that the NHS contract was supposed to deliver significant growth in their fourth quarter and late part of the third quarter, but "that ramp has not happened… there are a couple of contracts in which the ramp ups could have been faster and those things have got further delayed."

He added that TCS was able to absorb the slowdown through an increase in revenues from the US markets. TCS experienced a rise of 3% of volumes in the last quarter, while the rest of India’s IT consultancy industry averaged 8%.

The report comes after another consultancy firm heavily involved with NPfIT, Accenture, recently announced lower margins in its second financial quarter, which it attributed to problems with deployment. Accenture said they were discussing alternative deployment plans with NPfIT.