India’s largest IT services company, Tata Consultancy Services remains confident of compensating the loss of revenue from its mega-deal with BSNL, as it nears completion. "BSNL contract is 70 percent complete which means that its revenue impact will start tapering from Q4 itself. We're looking for multiple opportunities to compensate the revenue gap from this contract," K K Krithivasan, Chief Executive Officer and Managing Director said in the post-earnings call.
Krithivasan also showcased confidence over compensating much of the revenue void that will be created after TCS' contract with BSNL ends. "Will be able to compensate BSNL revenue in multiple other ways, be it through domestic or international deals. Though its replacement is definitely a headwind, we still know we will be able to replace most of it," Krithivasan said.
Revenue contribution from the BSNL deal, which will begin tapering from Q4, is likely to continue till Q1 or Q2 of FY25, TCS management said in the earnings call. However, there's also a possibility of an extension of TCS' collaboration with BSNL in future, bolstered by the fact that the IT major is setting up 4G sites for the telecom service provider.
"We believe that even as BSNL revenues pan down, growth returning in major markets--international and regional, and recovery in furloughs should help us sustain growth in Q4," Krithivasan added.
TCS is involved in a Rs 15,000 crore deal with BSNL which involves establishing data centres and 4G sites across India, while laying the foundation for future 5G infrastructure.
This partnership with BSNL has been a saviour for TCS as the deal has been driving growth for the company in the India region in the past couple of quarters and even boosted overall revenue amidst an environment of demand slowdown.
TCS' India market continued to drive growth in Q3, with revenue soaring 70.2 percent year-on-year in constant currency. A similar trend was seen in the previous quarter as well, when the India business recorded a stellar 95.2 percent year-on-year growth, primarily driven by the execution of the BSNL deal.
TCS Q3 order book grows 26% YoY to $10.2 billion, highest in past five fiscal years
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