India Business Shines Bright in TCS's Q2 Revenue Growth The India market grew 95.2 per cent year-on-year (YoY) in constant currency during the second quarter and contributed 8.9 per cent to the total revenue, up from 4.9 per cent during the same quarter of the previous year.
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The India market witnessed the highest growth for Tata Consultancy Services (TCS) during the second quarter ended September aided by ramp-up of deal with BSNL. TCS has bagged a Rs 15,000 crore deal from BSNL to establish data centers and 4G sites across India. This deal is expected to revolutionize mobile internet speeds and lay the groundwork for future 5G capabilities.
The India market grew 95.2 per cent year-on-year (YoY) in constant currency during the second quarter and contributed 8.9 per cent to the total revenue, up from 4.9 per cent during the same quarter of the previous year.
North America, the largest market for TCS declined 2.1 per cent YoY in constant currency and contributed 47.6 per cent to the total revenue. UK and Continental Europe grew 4.6 per cent and 1.8 per cent in constant currency and contributed 16.5 per cent and 14.9 per cent respectively to the total revenue as of the second quarter.
"Growth was primarily driven by the BSNL ramp-up (excluding India, growth was 0.7 per cent in USD terms vs. 2.2 per cent overall). The decline in North America was surprising, but this was attributable to client-specific issues in healthcare and persistent weakness in communications vertical. Last quarter marked a significant shift in client behavior, as the recovery in the US banking sector started taking shape – a trend that continued into this quarter's commentary too," analysts at Motilal Oswal said in a post-earnings note.
"Admittedly, there was little in the way of incrementally positive outlook as compared to Q1, and the precarious geopolitical landscape and continued macro uncertainty could keep the recovery range-bound," Motilal Oswal added.
TCS management reiterated its strong growth engine in the emerging markets. "We saw the cautious trends of the last few quarters continue to play out in this quarter as well. Amidst an uncertain geopolitical situation, our biggest vertical, BFSI showed signs of recovery. We also saw a strong performance in our growth markets. We stay focused on sharpening our value proposition to our clients, employees and other stakeholders," said K Krithivasan, Chief Executive Officer and Managing Director, TCS.
During the second quarter earnings, the TCS management said that clients continue to prioritize efficiency through cost transformation programs, and demand for discretionary deals with low immediate ROI remains relatively subdued.
The management further said that the company is seeing continued momentum in AI and GenAI adoption, with the underlying technology maturing rapidly. There are now over 600 AI and GenAI engagements, either deployed successfully in production or in various phases of development.
