 "Optimism wanes: TCS warns of seasonal trends impacting revenue in Oct-Dec")
New Delhi - The country’s largest software services firm Tata Consultancy Services (TCS) expects its revenue in October-December to be ‘in line with seasonal trends’.
The third quarter of the fiscal is traditionally weaker for IT companies as business is impacted by low volume growth amid Christmas and New Year holidays and furloughs in the US and Europe.
The US and Europe are the key markets for the over $100 billion Indian outsourcing sector.
“Q3 2015 revenue expected to be in-line with seasonal trends. Retail, Manufacturing and Hi-Tech likely to see impact of holidays and furloughs,” TCS said in an investor presentation today.
It added that banking, financial services and insurance continue to be impacted. According to a report on CNBC-TV18, the company said it was more positive at the start of the year and expressed difficulty in predicting the sentiment at this point.
Meanwhile, the company expects telecom and smaller verticals to grow better than the company average, the report said adding that it has maintained its operating margin guidance of 26-28 percent.
On geographies, TCS said the demand environment in North America is in-line, adjusted for seasonal weakness. It said pricing trends were fairly stable, and that demand environment in the US was in-line with expectations, the CNBC-TV18 report said.
It said growth in Europe revenues would be better than the company’s average, though the UK was expected to be weak.
“Europe to grow better than average while UK remains weak due to seasonality and impact of insurance,” it said.
In India, the demand environment was fragile, and growth from its India and Asia Pacific businesses would be in line with the company’s average growth.
The company is expecting a slight uptick in realisations and a 10-20 basis points positive impact due to dollar strengthening. However, it expected a negative 220 basis point impact due to cross currency headwinds.
Shares of the company closed 1.48 percent down at Rs 2,455.70 apiece on the BSE on Friday.
With inputs from PTI
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