India's TCS Sees Retail, Manufacturing Revival After Banking Recovery

India's largest IT services company, Tata Consultancy Services (TCS), has reported a strong quarter, with revenue growth and a positive outlook, driven by a recovery in the banking sector. This recovery is expected to boost the retail and manufacturing sectors, as indicated by the company's performance and growth prospects.



TCS reported a 3.6% year-on-year (YoY) revenue growth in the third quarter of FY25, with a book-to-bill ratio of 1.4 and a strong total contract value (TCV) of US$10.2 billion. The company's growth was led by the Consumer Business Group (+1.1%), Energy, Resources and Utilities (+3.4%), and Regional Markets (+40.9%). Notably, the Banking, Financial Services, and Insurance (BFSI) segment, which contributes significantly to TCS' core business, grew by 3.6% to Rs 23,481 crore.

The banking recovery, as reflected in the BFSI segment's growth, is expected to have a positive influence on the revival of the retail and manufacturing sectors. Here's how:

1. Improved Lending and Access to Credit: A robust banking sector leads to better access to credit for retail and manufacturing businesses. This is crucial for these sectors to invest in expansion, innovation, and working capital, thereby driving growth.
2. Increased Discretionary Spending: As the banking sector recovers, there is an improvement in discretionary spending in banking and retail, as mentioned by K. Krithivasan, Chief Executive Officer and Managing Director of TCS. This indicates that consumers and businesses are more confident in the economy, leading to increased spending on non-essential items and services.
3. Faster Decision-Making: Shorter deal cycles, as also noted by Krithivasan, suggest quicker decision-making. This could be due to improved access to credit and increased confidence in the economy, leading to faster business expansion and investment in the retail and manufacturing sectors.
4. Validation from TCS' Performance: TCS' revenue growth in the Consumer Business Group (+1.1%) and Energy, Resources and Utilities (+3.4%) segments supports the notion that the banking recovery is influencing the revival of these sectors.

TCS' strong performance and positive outlook indicate that the Indian economy is on track for growth, with the retail and manufacturing sectors expected to benefit from the banking recovery. As the company continues to invest in upskilling, AI/Gen AI Innovations, and partnerships, it is well-positioned to capture promising opportunities in the market.

In conclusion, India's TCS expects a retail and manufacturing revival after the banking recovery, driven by improved lending, increased discretionary spending, faster decision-making, and validation from the company's strong performance. As the Indian economy continues to grow, the retail and manufacturing sectors are poised for a robust recovery, supported by a strong banking sector and a positive outlook from leading IT services companies like TCS.