TCS Plans To Cut U.S. Dependence, Eyes Markets In Europe, Japan, Latin America

TCS Plans To Cut U.S. Dependence, Eyes Markets In Europe, Japan, Latin America

North America has traditionally been a significant market for the Indian IT sector, but economic uncertainty and inflationary pressures have led clients there to be cautious about discretionary spending, prompting TCS to explore regions with growth potential.

www.benzinga.comUpdated: Monday, January 15, 2024, 01:24 PM IST
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Tata Consultancy Services (TCS), India’s leading software services exporter, is set to shift its focus away from the US as its business weakens in the country.

What Happened: CEO K. Krithivasan said the Tata company will diversify towards markets such as Japan, Latin America and Southern Europe, as it looks to counter challenges faced in North America, Reuters reported.

This move follows TCS reporting its slowest quarterly profit growth since 2020, coupled with a continuous decline in revenue contributions from its primary market, North America, over the past four quarters.

CEO Krithivasan clarified that the intent is not to consciously reduce exposure in North America but to intentionally increase engagement in other geographies, such as Latin America, Southern Europe and Japan.

Why It Matters: North America has traditionally been a significant market for the Indian IT sector, but economic uncertainty and inflationary pressures have led clients there to be cautious about discretionary spending, prompting TCS to explore regions with growth potential.

Despite language and other barriers, TCS sees opportunities in markets like Japan, where the revenue contribution to the Indian IT sector remains minimal, despite being one of the largest tech spenders. Additionally, the company is refocusing attention on its home turf, with India contributing 6.1% of revenue in the latest quarter, the highest level since the second quarter of fiscal 2018. Latin America accounted for 2.1% of TCS’s revenue.

In contrast to competitors like Infosys, HCLTech, and Wipro, which have revised their revenue forecasts, TCS aims to leverage opportunities in diverse global markets for sustained growth.

(The article is published under a mutual content partnership arrangement between The Free Press Journal and Benzinga)

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