By Sai Ishwarbharath B and Haripriya Suresh
BENGALURU/MUMBAI (Reuters) – It's India Dad's Communication Services (NS:) expects its North American retail and manufacturing customers to increase spending on tech, following similar increases in banking and financial services, the nation's No. 1 software services company's top executive said.
“We've heard about good holiday season sales (in the US) that should boost consumer sentiment and productivity rather than some of the labor issues behind them,” the CFO said. Samir (CSE:) Seksaria told Reuters.
“If these three verticals (and banks) improve in general, we should see a good recovery,” he said.
Seksaria's cautious optimism highlights broader global economic uncertainty and sticky inflation that has forced consumers 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 its best performance since June 2023.
Sales and manufacturing are the second- and fourth-largest contributors to revenue at $29 billion.
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 online spending also increased nearly 9% to $241.4 billion during the recent holiday season.
TCS's communications and media vertical, a high-income segment that is currently one of the company's laggards, will also see interest rates start to decline, Seksaria said.
The comments are consistent with CEO Krithivasan's view that the incoming US administration is likely to remove policy uncertainty and boost consumer confidence in spending on sensible projects.
On Friday, its Mumbai-listed shares closed up 5.6%, the biggest one-day gain since July 2024.
TCS also played down concerns about the rise in procurement by multinational corporations through global technology centers (GCCs), which could reduce work that could have been contracted out to IT players in the past.
A growing number of global companies are setting up their home offices in India and expanding internal teams, adding roles such as engineering, cybersecurity and accounting and finance. India's GCC market size is estimated to reach $105 billion by 2030.
“In the beginning, there may be a cost benefit, perhaps the GCCs are now seen as centers of global cost savings. But as things go next year, cost savings and cost product delivery in the 3-year to 7-year where the cyclicality Opening and closing of GCC continues,” Seksaria said.
In 2023, Infosys (NS:) received the captured arm of Danske Bank (CSE:) and before TCS acquires the 1,500-employee Post Bank AG unit by the end of 2020.