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Tata Consultancy Services said on Friday it is banking on its robust deal pipeline to drive growth in 2025 after it reported lower-than-expected quarterly revenue on weak client spending in North America.

The $254-billion Indian IT sector's clients have been curtailing their discretionary spends amid inflationary pressures and recession fears in key markets such as the United States and Europe. Industry body Nasscom estimated overall revenue growth more than halved to 3.8% last financial year.

For fiscal year 2024, the software maker's revenue growth fell to 3.4% after adjusting for currency fluctuations, compared with 13.7% growth in the previous fiscal year.

"We believe that we are bottoming out. I don't want to call it, but we should start seeing growth (in its largest market and vertical) soon with a healthy pipeline over the last few quarters," CEO K Krithivasan said in a press conference.

"FY25 will be better than FY24. That's what we believe. I don't want to say (the) second half will be better than (the) first half or otherwise," he added.

Revenue in North America, which accounts for half of TCS' total revenue, slipped 2.3% in the fourth quarter, while revenue from banking, financial services and insurance clients, its biggest vertical, fell 3.2%.

Its consolidated revenue rose 3.5% to 612.37 billion rupees($7.34 billion) in the January-March quarter, missing analysts' expectation of 615.63 billion rupees, as per LSEG data.

"Discretionary spend is a bit lopsided," said N Ganapathy Subramaniam, the chief operating officer who will retire next month. He blamed elections, wars and uncertainty tied to AI regulation for clients holding back their discretionary spends.

TCS said it did not plan to appoint a new COO "for now" and would distribute the responsibilities of the veteran, who served the company for four decades, among its current leaders.

TCS raked in a record $13.2 billion worth of orders in the quarter, including a 15-year mega deal with UK insurer Aviva, an existing client. The deals were spread across industries and geographies, and included short-term deals of lower value.

"The operating margin numbers are a beat and fourth-quarter deal wins are strong. These points are silver linings in what was expected to be a weak quarter as macro headwinds are still a concern due to conservative tech spending," said IDBI Capital analyst Devang Bhatt.

TCS's operating margin rose 150 basis points to 26% due to what CFO Samir Seksaria called a "disciplined approach". That helped TCS's net profit rise 9.2% to 124.34 billion rupees.

Its smaller peers Infosys and Wipro are scheduled to report their results next week.

TCS's shares have gained about 6% so far this year, while the IT index has shed 1.4% and the blue-chip Nifty 50 index has gained 3.6%.

($1 = 83.4363 Indian rupees)