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TCS misses revenue estimates amid tariff-driven client caution

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Tata Consultancy Services (TCS), India’s largest software-services exporter, reported quarterly revenue below analyst expectations on Thursday, as client spending slowed due to ongoing uncertainty around U.S. tariffs. The revenue miss has sparked concerns over demand for India’s $283 billion IT sector and negatively impacted shares of U.S.-listed Indian tech rivals Infosys and Wipro.

TCS CEO K Krithivasan noted on a conference call that delays in decision-making and project launches related to discretionary spending have persisted and intensified during the quarter. He said it is “too early” to predict when growth will return but suggested that clarity might emerge by late July or early August, depending on the U.S. spending bill’s progress.

TCS reported consolidated sales of 634.37 billion rupees ($7.40 billion) in Q1, rising 1.3% year-on-year but falling short of the 646.66 billion rupees analysts had forecasted. Four of TCS’s six verticals saw revenue declines compared to the previous year, with only banking and financial services (up 1%) and technology services (up 1.8%) showing growth.

Total order bookings dropped to $9.4 billion in the quarter, down from $12.2 billion in the previous quarter but higher than $8.3 billion a year ago.

Research analyst Sagar Shetty from StoxBox highlighted that the weak top-line numbers reflect ongoing client caution, a trend likely to affect other tier-1 IT firms and potentially lead to downward revisions in revenue guidance. HCLTech, Infosys, and Wipro are set to report results later in July. Following TCS’s announcement, Infosys shares fell 3.3% and Wipro shares dropped 4.2%.

Despite the revenue shortfall, TCS’s net profit rose 6% to 127.60 billion rupees, beating analyst expectations largely due to a delayed wage hike and higher other income.

Cognizant to Invest $183 Million in New India Campus, Creating 8,000 Jobs

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Software services company Cognizant Technology Solutions announced plans to invest approximately 15.82 billion rupees ($182.76 million) to build a new campus in Vishakhapatnam, a city in southern India. The project is expected to generate about 8,000 jobs, with commercial operations scheduled to start in March 2029, according to an Andhra Pradesh government press release.

Cognizant did not immediately respond to requests for comment. This announcement follows a similar move by India’s leading IT firm, Tata Consultancy Services (TCS), which recently revealed plans to develop a 13.7 billion rupee campus in the same city, projected to create 12,000 jobs.

The investment aligns with Cognizant’s strategy to optimize real estate costs by shifting focus from India’s major metropolitan areas to tier-2 cities. CEO Ravi Kumar S highlighted in May 2023 that the company intends to reduce its global office space by 11 million square feet, mainly in large Indian cities, while investing more in smaller urban centers.

India’s $283 billion IT sector is currently adopting cost-saving measures, including monetizing real estate and delaying wage hikes, amid uncertain demand. Despite this, Cognizant recently raised its annual revenue forecast after exceeding first-quarter expectations, fueled by growing demand for AI-powered IT services.

The company now expects its 2025 revenue to range between $20.5 billion and $21 billion, up from its previous midpoint forecast of $20.3 billion to $20.8 billion.

India’s TCS Confirms No Systems Compromised in Marks & Spencer Cyberattack

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Tata Consultancy Services (TCS) stated that none of its systems or users were compromised in the recent cyberattack affecting British retailer Marks & Spencer (M&S), a client of over ten years.

At its annual shareholder meeting, independent director Keki Mistry said, “As no TCS systems or users were compromised, none of our other customers are impacted.” He added that the ongoing investigation into the M&S breach does not involve TCS systems.

This marks the first public comment from India’s largest IT services firm on the cyberattack. M&S did not immediately respond to requests for comment.

TCS provides technology services to M&S and secured a $1 billion contract in early 2023 to modernize the retailer’s legacy technology, focusing on supply chain and omnichannel sales improvements.

The cyberattack, disclosed by M&S in April, is described as “highly sophisticated and targeted.” It is expected to cost M&S approximately £300 million ($403 million) in lost operating profit, with online service disruptions anticipated until July.

Last month, the Financial Times reported that TCS was internally investigating whether its systems were used as a gateway for the cyberattack.

Mistry chaired the shareholder meeting, while Tata Group Chairman N Chandrasekaran was absent due to urgent matters related to a recent Air India plane crash in Ahmedabad, which killed 241 of the 242 passengers onboard.