Tata Consultancy sees 5.6 per cent rise in revenue despite market challenges

INDIAN IT giant Tata Consultancy Services (TCS) posted a 5.6 per cent on-year rise in revenue for the December quarter last Thursday (9), after lower earnings in its key North American market.

The leader of India’s $254 billion (£208.4bn) IT sector, TCS is the second-largest company in India by market capitalisation and earns over 80 per cent of its revenue from Western clients.

The Mumbai-headquartered firm has seen growth slow over the past 18 months as high inflation and global geopolitical uncertainty forced customers to cut back on tech spending.

It has forecast a better performance this year as demand slowly recovers, betting on a revival in North America’s banking sector, lower inflation and clients spending more on generative AI.

The firm’s October-December revenue rose 5.6 per cent year-onyear to `639.7 billion, slightly below analyst estimates of around six per cent.

Net profit for the period came in at Rs 123.99bn with “growth led by consumer business group, energy, resources and utilities, and regional markets”, TCS said in a statement.

“In a quarter that saw significant cross-currency volatility TCS’s strong execution, cost management and deft currency risk management helped deliver healthy margin improvement and free cash flows,” TCS chief financial officer Samir Seksaria said in the statement.

The earnings statement showed a 2.3 per cent on-year decline in the North American market, offset by growing domestic demand.

Top Indian IT firms have resumed adding employees on a net basis over the past two quarters, a boon for the job prospects of tens of thousands of young Indian engineering graduates who depend on the sector.

However, potential headwinds remain on the horizon.

Recent policy debates in the United States have sparked speculation over how the H-1B visa system, a major tool for Indian IT firms, may be severely cut back.

The IT services sector is one of India’s biggest employers and revenue earners.