TCS Starts Earnings Season With Worst Q3 Show in 9 Years

Tata Consultancy Services Ltd kicked off the quarterly earnings season on a gloomy note, clocking the worst third-quarter revenue decline since December 2015.

- Jas Bardia

Tata Consultancy Services Ltd kicked off the quarterly earnings season on a gloomy note, clocking the worst third-quarter revenue decline since December 2015. The key reason: Subdued business in the US and Europe, the biggest markets for India's largest IT services company.

TCS reported December quarter revenue of $7.54 billion, down 1.7% from the September quarter, and close to the $7.55 billion estimated in a Bloomberg analysts' poll. This was also its worst quarterly revenue performance since K. Krithivasan took over as chief executive officer in June 2023.

"Given the seasonal weakness and software discretionary demand environment in this quarter, most of the verticals and markets saw a sequential negative growth on a quarter-on-quarter basis," Krithivasan said at a post-earnings press conference. To be sure, TCS had pointed to the impact of seasonality and discretionary spending in the previous quarter as well.

Even as regional markets, including India, grew about 3% sequentially to $1.23 billion, overall growth suffered as revenue from each of its other businesses declined sequentially. Even revenue from Bharat Sanchar Nigam Ltd (BSNL), which shored up revenue from regional markets, could not boost overall growth. TCS is setting up data centres for the state-run telecom operator across India as part of a $1.83-billion 4G network deployment order it won in May 2023.