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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.

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.

M&S Cyberattack Traced to Third-Party Breach, Online Sales Disrupted Until July

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Marks & Spencer (M&S) confirmed on Wednesday that a recent cyberattack which disrupted its operations originated from a security breach at a third-party contractor, not from within its own IT systems. The attack, first disclosed on April 22, will continue to impact the British retailer’s operations for several more weeks, including a halt to online sales expected to last until July.

In a briefing with reporters, CEO Stuart Machin said hackers used social engineering tactics to infiltrate a contractor’s network, bypassing M&S’s internal digital defences.

“Unable to get into our systems by breaking through our digital defences, the attackers did try another route… entering through a third party rather than a system weakness,” Machin explained.
“Once access was gained, they used highly sophisticated techniques as part of the attack.”

Involvement of Tata Consultancy Services

M&S holds a long-standing IT contract with Tata Consultancy Services (TCS), and a source familiar with the investigation told Reuters that TCS may have been the access point exploited in the breach. TCS declined to comment, and Machin did not confirm whether TCS was the contractor in question.

Timeline and Response

Suspicious activity was first detected over the Easter weekend (April 19–20). According to Machin, the time from breach to detection was relatively short, particularly compared to the industry average of 10 days or more.
Immediately after discovering the breach, M&S involved cybersecurity experts, law enforcement, and government agencies.

So far, 600 systems have been scanned, and the process of gradually bringing them back online is underway.

Online Sales and Business Impact

M&S’s online retail operations remain suspended, and the company does not expect full functionality to resume before July. The company has not disclosed whether a ransom demand was issued, citing official advice.

The UK’s National Crime Agency is investigating the attack, reportedly focusing on a group of young, English-speaking hackers.

Despite having boosted its tech spending threefold over the past three years, Machin stressed that no organization is immune to cyber threats.

M&S generates nearly £14 billion ($19 billion) in annual sales, and the breach marks a major disruption for one of Britain’s most recognized retail brands.