TCS CEO warns of tariff fallout on retail, travel, and auto sectors amid trade uncertainty

TCS has also benefited from a growing trend of clients consolidating their IT vendors.

Tata Consultancy Services (TCS) CEO K Krithivasan has warned that clients in the retail, travel, and automobile sectors are increasingly vulnerable to the fallout from ongoing U.S. tariffs. In an interview with Reuters, Krithivasan stated that if the uncertainty surrounding tariffs persists, these sectors may resort to cost-cutting measures.

However, the banking and financial services sector, which accounts for nearly a third of TCS's revenue, remains largely unaffected by the trade tensions, according to Krithivasan.

"The consumer business, hospitality business, travel, and auto industry are the businesses that we have to watch out for. If the uncertainty continues for longer, those businesses may have to focus more on cost optimisation," he said. "At this time, I have not heard anything about major changes."

Retail and manufacturing are TCS’s second- and fourth-largest revenue contributors, while banking remains the largest. The company generates roughly half of its revenue from North America, a critical market for Indian IT services that faces tariff-related challenges due to its U.S. clients.

The ongoing global trade tensions and U.S. President Donald Trump’s fluctuating stance on tariffs have made market conditions harder to predict, which has led to hesitation among businesses about committing to large spending decisions.

TCS recently reported a miss in its fourth-quarter earnings estimates and warned that clients are delaying decisions on discretionary projects due to the prevailing uncertainty. Despite this, Krithivasan expressed optimism, saying he expects the uncertainty to be "short-lived."

Looking ahead, Krithivasan remains confident that fiscal year 2026 will outperform 2025, driven by the need for clients to replace legacy software and systems in the medium-to-long term.

TCS has also benefited from a growing trend of clients consolidating their IT vendors. "Particularly when customers look at cost optimization as a key focus area, they will try to reduce the number of service providers. TCS has been a beneficiary of these consolidations that have happened in FY25," Krithivasan added.