Domestic information technology firms are likely to get more deals from the US and Europe-based retail players, who are increasing their tech spends. During their recent post earnings call, major retailers like Walmart, Home Depot, Carrefour, Target and others outlined their plans to scale up spends on digital technologies and Generative artificial intelligence.
“We’re setting the right capital priorities and you can expect us to continue investing in the areas we’ve talked about like technology, including automation, store and club remodels, and with new stores and clubs in select markets,” C Douglas McMillon, president, CEO and director, Walmart, said, in the company’s post-earnings call. He added that that company is approaching new tools like generative AI to focus on making shopping easier and more convenient for customers and members and helping the associates enjoy more satisfying and productive work.
“Major retailers in US and Europe are improving customer and employee experience across physical and digital channels, speeding up online deliveries and exploring AI and large language models for predictive analytics,” ICICI Securities in a recent note. “Retailers are exploring use of AI and generative-AI for improving customer and employee experience. LTI Mindtree management even mentioned that industry is shifting towards predictive analytics and composite platforms that integrate with a variety of data sources and analytical tools,” the report added.
In April, Infosys partnered with Walmart commerce technologies to help retailers leverage technology solutions that simplify customer and store employee experiences.
Pareekh Jain, founder of Pareekh Consulting, said, “Major European retailers like M&S and Sainsbury, which saw negative growth last year are seeing positive growth momentum this year. Growth was less and therefore, we saw more large cost takeout deals to IT companies”. He sais that two of the large deals that TCS won in the last 10 months were from retail segment – Mark & Spencers and Sainsbury. Even LTIMindtree won a relatively large transformation deal from Curry’s of UK.
According to Jain, almost all Indian IT companies have recently launched Gen AI solutions including the popular Topaz by Infosys, which they will offer to their clients looking to leverage the power of Gen AI. More discretionary spends on Generative AI related projects will also help midcaps, unlike large cost takeout deals which normally go to large companies”.
Indian IT companies get about 12%-18% of their revenue from retail vertical. During the April-June quarter, three of the top six IT companies saw negative growth quarter on quarter in their retail vertical, where as the other three saw a muted growth between 0%-1%.