Tata Consultancy Services (TCS) is devising a new strategy following its slowest quarterly profit growth in four years, prompting the company to explore opportunities in markets beyond North America. In an attempt to diversify, TCS is eyeing regions like Japan, Latin America, and Southern Europe.
While North America remains a crucial market, TCS is consciously broadening its footprint in other geographies due to declining revenue contributions from its primary market. K. Krithivasan, a TCS executive, expressed the company's interest in markets with significant growth potential, citing challenges in North America, where clients are hesitant to invest in discretionary projects amid economic uncertainty.
Despite language and other barriers, TCS sees potential in untapped markets. Japan, for instance, despite being one of the largest tech spenders, contributes only a "very minuscule" portion to the Indian IT sector's revenue. TCS, traditionally known for catering to international clients, is also turning its focus to its home market. In the latest quarter, India accounted for 6.1% of TCS's revenue, the highest since the second quarter of fiscal 2018, while Latin America contributed 2.1%.
Amid challenges faced by the Indian IT industry, TCS remains optimistic about the upcoming financial year, in contrast to analysts labeling the current year as a "washout." Other major players in the industry, including Infosys, HCLTech, and Wipro, have adjusted their revenue forecasts, with Wipro warning of a potential revenue decline for the first time in three years. Looking ahead, TCS anticipates fiscal 2025 to be a more promising year than the current fiscal year, signaling a strategic shift and a focus on diverse markets for sustained growth.