itstargetnews
By Sai Ishwarbharath B and Haripriya Suresh
BENGALURU/MUMBAI (Reuters) – India’s Tata Consultancy Services expects its retail and manufacturing clients in North America to increase spending on technology, following a similar uptick in its banking and financial services segment, a top software executive in the country #1. exporter of services, he said.
“We’ve heard good holiday sales (in the US) which should boost consumer sentiment and manufacturing has some of the labor issues behind it,” Chief Financial Officer Samir Seksaria told Reuters.
“If these three verticals (along with banking) improve overall, we should see a nice recovery,” he said.
Seksaria’s cautious optimism highlights broader global economic uncertainties and sticky inflation that have forced customers to rein in technology spending.
The company’s revenue in North America, its biggest market, declined for a fifth consecutive quarter, although banking and financial services posted its best performance since June 2023.
Retail and manufacturing are the second and fourth contributors to the $29 billion behemoth’s revenue.
Last month, Walmart Inc, Amazon.com and PDD Holding’s fast-growing e-commerce sites Shein and Temu all broke sales records on Black Friday and Cyber Monday.
U.S. online spending also 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 company’s laggards, will also see some pick-up if interest rates start coming down, Seksaria said.
The comments echo Chief Executive Krithivasan’s sentiment that the new US administration is likely to remove political uncertainty and boost client confidence to spend on discretionary projects.
Its Mumbai-listed shares closed up 5.6% on Friday, their biggest gain since July 2024.
TCS also downplayed concerns over increased outsourcing by multinational companies through global capability centers (GCCs), which could reduce 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 in-house teams, adding roles such as engineering, cyber security and accounting and finance. India’s GCC market size is estimated to reach $105 billion by 2030.
“Initially, there could be a cost advantage, probably the GCCs at the moment are considered global cost savings centers. But as things progress next year, cost maintenance and cost productivity in a period of 3 to 7 years is where the cyclicality is of opening and closing of GCCs is still coming,” said Seksaria.
