It pays to own a luxury carmaker—especially when times are tough for the information technology (IT) sector. Jaguar Land Rover (JLR) continues to be the cash cow for the Tata Group’s three technology companies at a time of growth challenges due to the rising usage of automation tools and slow tech spending.
Tata Technologies Ltd becomes the first Tata Group company to seek shareholder approval to increase its business from JLR, less than a year after the group’s luxury carmaker was jolted by cyberattacks.
According to Tata Technologies’ FY26 annual report, the Pune-based engineering services firm expects to seek shareholder approval on 26 June to increase its business from JLR to about ₹1,750 crore in the current fiscal, translating to almost a third of its revenue.
Tata Technologies got about ₹1,337 crore from Coventry-based JLR last year, up 11% from the preceding year and accounting for about a fourth of its revenue. Tata Technologies manages JLR’s backend tech needs and has been increasing its exposure to JLR since FY24, when business from the car company made up a fifth of its revenue.
Tata Consultancy Services Ltd (TCS) and Tata Elxsi Ltd are also eyeing JLR. Together, the three companies expect to get about ₹6,000 crore in revenue from the car company.
Related-party transactions are beneficial for companies at a time of slow growth, but one analyst highlighted caution.
“Having a related-party exposure is not all that bad. It gives the tech firms a good runway to grow at a time of bleak demand from auto firms,” said Sushovon Nayak, lead IT analyst at Anand Rathi Institutional Equities. “However, there is a risk if concentration is too much because any adverse event in that one client can hurt the IT firm.”
Cyberattack impact
In September, JLR was rocked by cyberattacks that halted operations and services for existing vehicles. It ended last fiscal with £22.9 billion ($30.5 billion) in revenue, down 21%, while net profit fell 99.4% to £14 million. This decline was driven in part by more than $1.1 billion in additional costs arising from the cyberattack on its manufacturing facilities and higher tariffs on exports to the US market.
Tata Elxsi sought shareholder approval for dealings with JLR worth ₹1,200 crore in FY27. The company got ₹845.9 crore in revenue from JLR for developing its infotainment and internal software, down 1.24%. It gets a little more than a fifth of its revenue from JLR. In FY25, the company had sought approval for dealings with JLR up to ₹1,200 crore in FY26.
TCS earned ₹3,566 crore from the car company last fiscal, down 2.6%. The country’s largest IT services company manages JLR’s IT infrastructure, cybersecurity, cloud networks and data. Simply put, while Tata Elxsi manages the software inside the car, TCS and Tata Technologies manage the software that runs the company that builds the car.
TCS has not disclosed in its annual filings if it intends to increase its business from JLR in the current fiscal. The Mumbai-based IT company last sought shareholder approval in FY25 to get revenue up to ₹4,400 crore from JLR. TCS earned about 1.3% of its revenue from JLR last fiscal.
While Tata Technologies and Tata Elxsi have handled JLR’s IT and engineering work for at least two decades, its partnership with TCS is comparatively new. TCS signed an IT transformation deal with JLR in September 2023. This five-year deal, valued at $1 billion, includes managing the car company’s back-end IT, cloud migration, cybersecurity, data services, and application development.
Growth blues
For now, it appears each of the IT vendors is piggybacking on JLR as they face growth blues.
TCS ended last year with $30.02 billion in revenue, down 0.5%. This was its first revenue decline since listing on the stock exchanges in 2004. Much of this fall was due to a 32% drop in revenue from its India business.
Tata Elxsi grew at its slowest pace in five years. The Bengaluru-based IT company ended last year with ₹3,757 crore ($437 million) in revenue, up 0.8%, which the management attributed to weakness in spending by car companies.
However, given the current geopolitical situation and the war in West Asia, there could be some amount of uncertainty, Manoj Raghavan, chief executive officer (CEO) of Tata Elxsi, said on a post-earnings conference call on 21 April. He expects high-single digit growth for the automotive business.
Tata Technologies overturned a revenue decline to end last year with $619.8 million, up 1.5%. Most of its growth came from its largest client, JLR, as revenue from the car company jumped 10% on a yearly basis.
“The growth outlook for FY27 is not based on any single customer, it is being driven by a recovery in customer decision-making, increasing engagement across both Tata Group accounts and global strategic accounts and a growing pipeline of engineering programmes across OEMs in automotive, aerospace and industrial heavy machinery,” a Tata Technologies spokesperson said in response to Mint’s email.
