By Sai Ishwarbharath B and Haripriya Suresh

BENGALURU/MUMBAI (Reuters) – India Tata Consulting Services (NS:) expects its retail and manufacturing clients in North America to increase spending on tech, following similar growth in its banking and financial services segment, a top executive at No. 1 software-services exporter in the country, said.

“We heard about good holiday sales (in the US) that should boost consumer sentiment and manufacturing has some labor issues behind them,” CFO. Samir (CSE:) Seksaria told Reuters.

“If these three verticals (including banking) improve as a whole, we should see good recovery,” he said.

Seksaria’s cautious optimism underscores broader global economic uncertainty and lingering inflation that is forcing clients to maintain a tight rein on technology spending.

The company’s revenue in North America, its largest market, declined for the fifth consecutive quarter even as banking and financial services posted their best performance since June 2023.

Retail and manufacturing are the second and fourth largest revenue contributors to the $29 billion behemoth.

Last month, Walmart (NYSE: ) Inc, Amazon.com (NASDAQ: ), and fast-growing e-commerce sites Shein and PDD Holding’s Temu, saw record-breaking sales on Black Friday and Cyber ​​​​​​​Monday.

Online spending in the US also increased nearly 9% to $241.4 billion in the recent holiday season.

TCS’s communications and media vertical, a capital-intensive segment that is currently one of the company’s laggards, will also see some pickup if interest rates start to come down, Seksaria said.

The comments echo CEO Krithivasan’s sentiment that the incoming US administration is likely to remove policy uncertainty and increase client confidence to spend on discretionary projects.

On Friday, Mumbai-listed shares closed up 5.6%, the biggest one-day rise since July 2024.

TCS has also downplayed concerns about the rise of insourcing by multinational corporations through global capability centers (GCCs), potentially cutting off work that would have been contracted out to IT players in the past.

More and more global companies are adding their local offices in India and expanding in-house teams, adding roles such as engineering, cybersecurity and accounting and finance. India’s GCC market size is estimated to reach $105 billion by 2030.

“Initially, there was a cost advantage, perhaps the GCCs are now seen as centers of cost savings in the world. to open and close the GCCs continues to arrive,” said Seksaria.

In 2023, Infosys (NS:) captured the captive arm of Danske Bank (CSE:) and before that TCS acquired the Post Bank AG unit of 1,500 employees in late 2020.