TCS may outperform peers in FY25 growth

TCS benefited from having a different mix of services and most importantly, having a bigger footprint in the Europe and Indian marketplaces. If you look at its performance in North America, it is very similar to Infosys and Wipro. However, the large contracts they won in India and Europe have pulled them through - Peter Bendor Samuel, CEO, Everest Group, tells Bizz Buzz

Bengaluru: Tata Consultancy Services (TCS) is likely to perform better in the current financial year as compared to its peers in the industry as its strong positioning in the Indian and European markets will support its growth trend.

According to analysts, while most big IT firms saw similar growth levels in the key North American market including the US, the performance of TCS in Europe and India helped it to grow faster than other firms.

“TCS benefited from having a different mix of services and most importantly, having a bigger footprint in the Europe and Indian marketplaces. If you look at its performance in North America, it is very similar to Infosys and Wipro. However, the large contracts they won in India and Europe have pulled them through,” Peter Bendor Samuel, CEO of global consultancy firm, Everest Group, told Bizz Buzz.

“TCS is a strong firm which is well-positioned. Its renewed focus under the new CEO is driving improved performance which is likely to be sustainable. Their past investments in establishing strong positions in Europe and the Indian markets will continue to pay dividends. Hence, we are likely to see TCS perform well relative to their peers as FY25 unfolds,” he added.

In FY24, while TCS saw a revenue growth of 3.4 per cent in FY24, Infosys’ revenue grew by 1.9 per cent during this period. Wipro’s revenue from IT services saw a fall of 4.4 per cent during the last fiscal year.

In the fourth quarter of last fiscal year, most large and mid-tier firms reported tepid growth in their revenues from the US and other North American markets. TCS saw its North American market revenue declining by 2.3 per cent in Q4, while Infosys witnessed its North American revenue declining by 2.2 per cent during this period. Similarly, for Wipro, Americas market saw a degrowth of 1.8 per cent in Q4 of FY24.

While US as a market didn’t perform for TCS, its growth in Europe and India remained sound in FY24. Revenue from the UK for TCS, constituting a 16.5 per cent share, rose 10.1 per cent in FY24. Growth in Continental Europe, with a 14.9 per cent share, grew 0.7 per cent. India and MEA also jumped 20.2 per cent and 14.4 per cent growth respectively.

Growth in Europe and key Asian markets compensated the decline in the US markets. Especially, large deals with Jaguar Land Rover and Aviva in the UK along with BSNL in India helped the company to improve its performance from these geographies.

Sources in the know said that ramp-up from these new deals are likely to support growth of TCS in the current financial year.