(Commonwealth_India )Tata Consultancy Services (TCS), India’s largest software exporter, is closely monitoring the impact of U.S. tariffs especially on its clients in sectors such as retail, travel, hospitality, and automobiles. According to K. Krithivasan, the company’s CEO, these industries are more vulnerable to the ongoing global trade uncertainties, which have been heightened by U.S. tariff policies. If the uncertainty persists for an extended period, businesses in these sectors might have to implement cost-cutting measures.
Although these sectors are showing signs of potential caution, Krithivasan emphasized that there has been no immediate indication from clients to scale back their operations or budgets. However, the hesitation to approve large discretionary spending projects is becoming more evident, especially in industries more sensitive to shifts in consumer behavior and global trade flows.
Despite these concerns, TCS’s banking and financial services segment—which contributes nearly one-third of the company’s overall revenue—remains stable and currently unaffected by the tariff developments. This sector continues to provide a strong foundation for the company’s revenue stream and is considered more resilient in the face of geopolitical and economic disruptions.
The North American market remains vital for TCS, accounting for around 50% of its revenue. This makes the company, like many of its Indian IT peers, significantly exposed to fluctuations in U.S. policy and economic sentiment. The impact of these factors was reflected in TCS’s recent quarterly performance, as the company missed analysts’ estimates for the fourth quarter, attributing the shortfall in part to delays in client decision-making regarding non-essential or discretionary IT projects.
Still, the broader outlook remains cautiously optimistic. Krithivasan stated that TCS expects the current phase of uncertainty to be temporary, expressing confidence that the fiscal year 2026 will show improved performance compared to 2025. A significant driver of this optimism is the anticipated demand for modernization, as many clients continue to rely on outdated legacy systems that will eventually need to be replaced or upgraded. This need for digital transformation, despite short-term headwinds, is expected to generate new business opportunities in the medium to long term.
In the face of cost optimization pressures, companies are increasingly consolidating their IT service providers. TCS has emerged as a beneficiary of this consolidation trend, gaining market share as clients seek to streamline operations and reduce vendor complexity. This shift has been particularly evident in fiscal year 2025, where TCS saw increased traction due to its scale, comprehensive service offerings, and longstanding client relationships.
Overall, while TCS faces near-term challenges due to global economic volatility and client hesitation in certain sectors, its leadership remains optimistic about long-term growth opportunities driven by digital transformation and vendor consolidation
