India’s TCS expects recovery in retail sales and manufacturing after recovery of banks By Reuters
Sai Ishwarbharath B and Haripriya Suresh
BENGALURU/MUMBAI (Reuters) – India Tata consulting services (NS:) expects its North American retail and manufacturing clients to increase spending on technology, following similar growth in the banking and financial services segment, the CEO of the country’s largest software services exporter said.
“We’ve heard of good sales during the holiday season (in the US) which should boost consumer sentiment, and manufacturing has some labor issues behind it,” the CFO said Samir (CSE:) Seksaria told Reuters.
“If these three verticals (along with banking) generally improve, we should see a good recovery,” he said.
Sexaria’s cautious optimism underscores broader global economic uncertainties and sticky inflation that have forced clients to rein in technology spending.
The company’s revenue in North America, its biggest market, fell for the fifth straight quarter even as banking and financial services posted its best performance since June 2023.
Retail and manufacturing are the second and fourth largest revenue contributors to the $29 billion giant.
Last month, Walmart (NYSE:) Inc, Amazon.com (NASDAQ:) and PDD Holding’s fast-growing e-commerce sites Shein and Temu saw record sales on Black Friday and Cyber Monday.
And online spending in the US rose nearly 9% to $241.4 billion during the recent holiday season.
TCS’s communications and media vertical, a capital-intensive segment that is currently one of the laggards, will also see some upside if interest rates start to fall, Seksaria said.
The comments echo CEO Krithivasan’s view that the new US administration is likely to remove policy uncertainty and boost client confidence to spend on discretionary projects.
On Friday, its Mumbai-listed shares rose 5.6%, the biggest daily gain since July 2024.
TCS also downplayed concerns about the rise of insourcing by multinational corporations through global capability centers (GCCs), potentially reducing work that would have been outsourced to IT players in the past.
A growing number of global companies are growing their local offices in India and expanding internal teams, adding roles such as engineering, cyber security and accounting and finance. The size of India’s GCC market is estimated to reach $105 billion by 2030.
“Initially there could be a cost advantage, probably the GCC countries right now are seen as global centers for cost savings. But as things go into next year, maintaining costs and delivering cost productivity over a period of 3 to 7 years is where the cyclicality is the opening and closing of the GCC continues,” Seksaria said.
In 2023 Infosys (NS:) acquired a captured hand Danske Bank (CSE:), and before that TCS took over the 1,500-employee Post Bank AG unit in late 2020.
