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Informist, Thursday, Jan. 9, 2025

By Anand JC

MUMBAI – Tata Consultancy Services Ltd.'s deal with Bharat Sanchar Nigam Ltd. is currently 70% complete, the company's executives told analysts at a post-earnings call Thursday. The deal with BSNL for the deployment of fourth-generation network is expected to start tapering off from Jan-Mar and may close by Jul-Sept, the company's management said.

The technology services major had bagged the INR 150-billion deal from BSNL in May 2023. Analysts had expressed concerns about downside risks to their estimate on TCS from the BSNL deal ramp-down in 2025-26 (Apr-Mar). During the call, TCS said it hopes to compensate for the lack of revenue from BSNL in multiple other ways, both internationally and domestically. The company expects 2025 to be better than 2024, mainly because of international demand.

The company said it will look for new businesses with the capabilities it acquired from the BSNL deal. TCS will look to win newer projects globally using this new capability while expressing confidence about managing the impact of tapering off of the BSNL deal. 

BSNL in November floated a tender to roll out commercial 5G services. Given the fact that it has successfully executed the 4G deal with BSNL, TCS said it qualifies for the 5G tender and will be participating in it.

On the banking and financial services segment, TCS said easing inflation, falling unemployment, and a stable government in the US promises a 'cautious optimism' for 2025. The banking and financial services segment in North America posted growth in the last quarter of 2024, with all large accounts contributing to the growth.

In the December quarter, TCS saw a good number of large deals and expects a strong pipeline for the future, the company executives said. The company expects headwinds due to unresolved geopolitical tensions, trade wars, and uneven growth, they said. 

The company is seeing excellent traction in the new growth markets, with the clients there focusing on digital transformation services including cloud migration, cloud native applications, application modernisation, and advanced data analytics. For TCS, new growth markets include Latin America, West Asia, Africa, Asia-Pacific, New Zealand, and Australia. 

Its track record of executing nation-building in these markets along with strategic investments gives it a unique opportunity for long-term sustainable growth, the company executives said.

On headcount, the company said it has significantly added to its workforce in Apr-Sept in anticipation of seasonal weakness. TCS said the lower headcount addition in Oct-Dec was not a sign of weak demand. The operating margin of TCS in the December quarter was 24.5%. The company earlier said it wanted to achieve an operating margin of 26%, but had not specified a timeline. TCS said it would push further in the final quarter to hit the target.

Shares of TCS ended 1.7% lower at INR 4,038.85 on the National Stock Exchange on Thursday.  End

Edited by Saji George Titus and Tanima Banerjee

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