TCS explores market diversification amidst weakness in the United States
India's leading software-services exporter, Tata Consultancy Services (TCS), is strategizing to increase its focus on markets outside North America due to the region's economic weakness.
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India's leading software-services exporter, Tata Consultancy Services (TCS), is strategizing to increase its focus on markets outside North America due to the region's economic weakness. The move follows TCS's recent report of its slowest quarterly profit growth since 2020, accompanied by a decline in revenue contributions from North America for four consecutive quarters.
K. Krithivasan, the CEO of TCS, emphasized that the company is not deliberately reducing its exposure to North America but is actively seeking opportunities in other regions like Japan, Latin America, and Southern Europe. The hesitation of IT clients in North America to invest in discretionary projects amid inflationary pressures and economic uncertainties has prompted TCS to explore markets with substantial growth potential, despite language and other barriers.
Krithivasan highlighted the underutilized potential in Japan, one of the largest tech spenders globally, despite its minimal contribution to the Indian IT sector's revenue. Additionally, TCS is paying closer attention to its home market, with India contributing 6.1% of the revenue in the latest third quarter, the highest level since fiscal 2018's second quarter. Latin America accounted for 2.1% of TCS's revenue.
While TCS has traditionally thrived by serving clients abroad, it is now adapting its strategy to tap into new opportunities both internationally and domestically. The company's diversification plan aligns with the broader trend in the Indian IT industry, where other major players like Infosys, HCLTech, and Wipro are also adjusting their strategies in response to the current economic landscape.
Despite challenges faced by the Indian IT industry in the current financial year, Krithivasan expresses optimism for the upcoming fiscal year, contrasting with some analysts who deemed the present year a "washout" for the sector. TCS aims for a better performance in fiscal 2025, anticipating improved market conditions and growth opportunities.
