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TCS North American revenue falls below 50% for first time in 3 years

TCS North American revenue falls below 50% for first time in 3 years

While the US market is weak, Tata Consultancy Services (TCS) saw its key market account for less than half of the company’s total revenue.

Revenue from the North American market was 49.5% in the June quarter, the lowest contribution since the first quarter of fiscal 2022.

North America, the company’s largest market, contributed 50% of total revenue in the March quarter, up from 52% a year ago. Except for North America, all regions reported YoY growth in Q1FY25.

However, the decline in North America’s dominance can also be attributed to increased exposure to other emerging markets, including India. During the quarter, revenues from India grew 62% year-on-year.

Although it contributes less than 8% to total revenue. All major markets showed sequential growth in Q1, with emerging markets reporting a robust set of numbers, led by India, the company said.

The North American market also showed growth on a sequential basis. According to the company’s management, it will take a few more quarters or a superior quarter to report year-over-year growth.

“The kind of growth we have is improving, but it will need continued growth in the coming quarters to become positive on a year-on-year basis,” said K. Krithivasan, MD and CEO of the company.

The company has a large exposure to the BFSI (Banking, Financial Services, and Insurance) segment in North America. As BFSI starts picking up, North America will also see some improvement. During the quarter, the BFSI segment in North America grew better than Europe, Krithivasan said.

TCS on Thursday (July 11) reported better-than-expected earnings for the June quarter. Net profit for the quarter came in at ₹12,040 crore. That compares with a CNBC-TV18 analyst poll of ₹11,989 crore.

Furthermore, revenue in US dollars rose 1.9% to $7.5 billion. For comparison, CNBC-TV18’s estimate put revenue at $7.4 billion.

Management sounded more optimistic for the current year, saying that fiscal 2025 will be better than the previous fiscal year. But a word of caution: it is too early to tell whether the growth momentum is sustainable.

Shares of TCS closed 0.4% higher at ₹3,923.70 on the NSE ahead of the earnings announcement and are up 4% so far this year.