India’s TCS expects revival in sales, productivity after bank acquisition By Reuters
By Sai Ishwarbharath B and Haripriya Suresh
BENGALURU/MUMBAI (Reuters) – India’s Tata Consulting Services (NS:) expects its North American retail and manufacturing clients to increase spending on technology, following similar increases in its banking and finance segment, a chief executive of the nation’s No. 1 software services vendor said.
“We’ve heard of good holiday sales (in the US) that should boost consumer sentiment and manufacturing has labor issues behind it,” the CFO said. Samir (CSE:) Seksaria told Reuters.
“If these three verticals (and banking) improve overall, we should see a good recovery,” he said.
Seksaria’s cautious optimism highlights broader uncertainty in the global economy and sticky inflation that has forced customers to hold back on technology spending.
The company’s revenue in North America, its largest market, fell for the fifth consecutive quarter as banking and financial services posted their best performance since June 2023.
Sales and manufacturing are the second- and fourth-largest revenues for the $29 billion behemoth.
Last month, Walmart (NYSE:) Inc, Amazon.com (NASDAQ:), and fast-growing e-commerce sites Shein and PDD Holding’s Temu, saw record sales on Black Friday and Cyber Monday.
US internet spending also rose nearly 9% to $241.4 billion during the recent holiday season.
TCS’s communications and direct media, a capital-intensive segment that is currently one of the company’s laggards, will also see some upside if interest rates start to come down, Seksaria said.
These comments are consistent with CEO Krithivasan’s sentiment that the incoming US administration is likely to remove policy uncertainty and increase customer confidence to implement smart projects.
On Friday, its Mumbai-listed shares closed up 5.6%, their biggest one-day gain since July 2024.
TCS has also downplayed concerns over increased procurement of services from international organizations through global capability centers (GCCs), which may have reduced work that could have been contracted out to IT players in the past.
A growing number of global companies are expanding their local offices in India and expanding in-house teams, adding roles such as engineering, cybersecurity and accounting and finance. India’s GCC market size is estimated to reach $105 billion by 2030.
“Initially, there would be a cost advantage, maybe the GCCs are currently seen as centers of global cost savings. But as things progress next year, cost containment and bringing cost productivity over a period of 3 to 7 years is where the cycle continues. the opening and closing of GCC continues to come,” said Seksaria.
In 2023, Infosys (NS:) received the captive arm of Danske Bank (CSE:) and before that TCS acquired Post Bank AG’s 1,500-employee unit in late 2020.
