Telecom, networking decelerate tech spending

Three of the top four IT services companies in India disclose a YoY decline in tech spending among communications and networking clients around the world

- VERNIKA AWAL

The June quarter earnings for India's multibillion-dollar IT services sector closed last month, with analysts highlighting multiple factors behind the slump. A key factor that caused the quarterly slowdown was the communications sector, which saw a year-on-year (YoY) decline for three of the top four IT services companies in the country.

HOW COMPANIES FARED

Tata Consultancy Services (TCS), the largest IT services company in India in terms of market share, stands out as the sole member among the top four to have avoided a segmental decline. However, the growth reported in its communications and media segment was notably slim. The company's Q1 FY 2024 earnings reported revenue of USD 462.4 million from the communications and media vertical in the June quarter. This marked a marginal 0.5% YoY increase in constant currency (CC), which discounts currency fluctuations. Notably, the company's revenues from the vertical stood at USD 461.1 million during the same period in the previous fiscal.

Overall, the company's quarterly revenue grew 6.6% YoY to USD 7.23 billion, up from USD 6.78 billion in the year-ago period. The contribution of TCS' communications and media clients dropped to 6.4% during the AMJ quarter, down 40 basis points from 6.8% during the previous year.

Communications and media is TCS smallest revenue contributor among major business segments.