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By Bloomberg

Tata Consultancy Services Ltd. profit surpassed analysts’ estimates amid increased demand in Europe for software services.

Net income rose to 57.1 billion rupees ($900 million) in the quarter ended in June, from the 50.6 billion rupees reported a year earlier, the Mumbai-based company said Thursday. That compares with the 55.1 billion-rupee median of 27 analyst estimates compiled by Bloomberg.

Profit climbed amid higher demand in Europe, where Tata Consultancy gets more than a quarter of sales, and increased technology spending at retailers. The company is well positioned to tap a $52 billion outsourcing opportunity on the continent after the 2013 acquisition of French consulting services company Alti SA, according to brokerage PhillipCapital (India) Pvt.

“They have been growing at a very robust rate, and the reason for that is that they identified this opportunity a long way back. They are present across Europe,” Vibhor Singhal, an analyst at PhillipCapital in Mumbai, said before the results announcement. “Any incremental deals which are being won, TCS is taking a large share of that.”

Sales at Asia’s largest exporter of software services by market value rose 16 percent to 257 billion rupees, in line with the median of 29 analysts’ estimates. Sales in Europe grew 19 percent over the previous quarter.

‘Strong Pipeline’

Demand in the company’s core markets including North America and more opportunities to build digital solutions for companies in financial services, retail and life-sciences industries helped drive growth, Chief Executive Officer N. Chandrasekaran said in the earnings release.

“Given the strong pipeline and market adoption of digital across industries, we are investing to train over 100,000 professionals this year,” he said.

Shares of Tata Consultancy fell 2.8 percent to 2,522.50 rupees in Mumbai Thursday, before the announcement. The S&P BSE Sensex declined 0.4 percent in the day.

The stock has advanced 5.2 percent in the past 12 months, while the benchmark index has added 8.4 percent and second- ranked Infosys Ltd. has climbed 13 percent.

Worldwide spending on information technology services is projected to shrink to $914 billion in 2015, researcher Gartner Inc. forecast on June 30, citing the dollar’s strength as a major factor. Price declines and demand for “more-efficient delivery methods” are also weighing on the outlook, it said.

Worker Attrition

Tata Consultancy said among the orders it won last quarter were contracts from a global communications technology major, a leading European financial institution and a North American luxury fashion company. One of the new clients would contribute revenue of more than $100 million, the company said.

“Volume is up, but revenue is lower than we expected,” Girish Pai, an analyst at Nirmal Bang Institutional Equities in Mumbai, said by phone. “Pricing pressure is visible.”

Worker attrition rose to 15.9 percent in the three months ended June from 14.9 percent in the preceding period. Tata Consultancy added a net 5,279 employees during the quarter for a workforce totaling 324,935 people at the end of June.

Infosys, Tata Consultancy’s nearest Indian competitor, is scheduled to report earnings on July 21.