Written by Sai Ishwarbharat P and Haripriya Suresh
BENGALURU/Mumbai (Reuters) – India Tata Consultancy Services (NS:) expects its North American retail and manufacturing customers to increase spending on technology, following a similar improvement in the banking and financial services sector, a senior executive at the country's largest software services exporter said.
“We have heard about good holiday sales (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 sectors (along with banking) improve overall, we should see a good recovery,” he said.
Seksaria's cautious optimism highlights broader global economic uncertainty and persistent inflation that has forced clients to restrict technology spending.
The company's revenue in North America, its largest market, fell for the fifth straight quarter even as banking and financial services recorded 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 fast-growing e-commerce sites Shein and PDD Holding's Temu saw record sales on Black Friday and Cyber Monday.
Online spending in the United States also rose nearly 9% to $241.4 billion during the recent holiday season.
TCS' telecom and media segment, a capital-intensive sector that is currently one of the company's laggards, will also see some recovery if interest rates start falling, Seksaria said.
These comments reflect CEO Krithivasan's feeling that the incoming US administration is likely to remove policy uncertainty and boost customer confidence in spending on discretionary projects.
Its Mumbai-listed shares closed 5.6% higher on Friday, the highest single-day rise since July 2024.
TCS also downplayed concerns about the rise in insourcing by multinational companies through Global Capability Centers (GCCs), which could lead to a reduction in work that would have been contracted out to IT companies in the past.
A growing number of global companies are increasing their local offices in India and expanding internal teams, adding roles such as engineering, cybersecurity, accounting and finance. The size of India's market in the GCC countries is expected to reach $105 billion by 2030.
“Initially, there may be a cost advantage, and the GCC countries may currently be seen as global cost-saving centres. But as things go into next year, maintaining cost and achieving cost productivity in a period of 3 to 7 years is where cyclical fluctuations continue and the opening and closing of the GCC continues, Seksaria said.
In 2023, Infosys (NS:) Got the captive arm of Danske Bank (CSE:) Before that, TCS acquired the 1,500-employee Post Bank AG unit in late 2020.
