JLR Fuels Tata Tech Growth Amid IT Slowdown

Jaguar Land Rover (JLR) continues to be a vital revenue engine for Tata Group's technology companies, providing a crucial boost during a period of growth challenges in the IT sector. Tata Technologies is preparing to seek shareholder approval on June 26 for an increased business engagement with JLR, projecting approximately ₹1,750 crore in revenue for the current fiscal year. This figure would constitute nearly a third of Tata Technologies' total revenue.

Last fiscal year, Tata Technologies secured about ₹1,337 crore from JLR, an 11% increase from the prior year, accounting for roughly a quarter of its revenue. This partnership, managing JLR's backend tech needs, has seen growing exposure since FY24. Other Tata Group entities, including Tata Consultancy Services (TCS) and Tata Elxsi, also rely on JLR, with the three companies collectively expecting around ₹6,000 crore in revenue.

However, this reliance presents a concentration risk. JLR experienced significant financial setbacks following cyberattacks in September, which halted operations and services. The carmaker ended the last fiscal year with a 21% revenue decline to £22.9 billion ($30.5 billion) and a 99.4% net profit drop to £14 million, partly due to over $1.1 billion in additional costs stemming from the cyberattack and increased US tariffs.

Tata Elxsi received ₹845.9 crore from JLR last fiscal year, a slight decrease, with JLR contributing just over a fifth of its revenue. TCS, the largest Indian IT services company, earned ₹3,566 crore from JLR, also a slight decrease. TCS manages JLR's IT infrastructure, cybersecurity, and cloud services. While Tata Elxsi and Tata Technologies have long-standing relationships with JLR, TCS's partnership is more recent, marked by a $1 billion, five-year IT transformation deal signed in September 2023.

These IT vendors are leveraging JLR as they face their own growth slowdowns. TCS reported its first revenue decline since its 2004 listing, while Tata Elxsi experienced its slowest growth in five years, attributing it to reduced spending by automotive companies. Tata Technologies managed to reverse a revenue decline, with most of its growth driven by JLR.