Here's a look at how TCS, Infosys, and HCL Tech fared in bagging new deals
Aug 4, 2020, 10:14 IST
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- Indian IT firms are still winning fresh contracts and bringing in new business even as the volume and value of global IT contracts are shrinking.
- The value and volume of global IT contracts fell by over 70% in the last three months compared to the same time last year.
- Management at TCS, Infosys and others believe deals are only set to grow in the coming quarters, led by the demand for digital transformation as remote working becomes the norm.
Indian IT firms remain hopeful that the pace of new deals wins is only going to increase in the coming months. Yet GlobalData shows that new IT contracts are shrinking worldwide — both by value and volume.
From $14.4 billion of global IT services spending at the end of June last year, this year companies only doled out $4 billion. Only 7% of the contracts signed in the last three months were valued above $100 million.
However Indian IT firms are witnessing a different trend, with deal win numbers that are better than what they were in 2019. And, the management commentary paints a very different picture of new deal wins improving in the coming quarters.
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Analysts believe that the crunch in IT spending is due to pricing pressures. Most businesses are looking to conserve cash in the face of uncertainty.
Indian IT companies — like Tata Consultancy Services (TCS), Wipro, Infosys, HCL Technologies and Tech Mahindra — believe that even though there was disruption, the current demand is driven by digital transformation. More businesses are looking to work from home bringing cloud adoption, automation, cybersecurity and consolidation to the forefront.
The biggest IT company in India, TCS, saw a 22.5% dip in the value of new deal wins at the end of June as compared to three months ago, but when compared to the previous year — the value of its new deal wins was actually up by 21% at $6.9 billion.
“Overall, from a first-quarter order book perspective, contrary to the fears of economic uncertainty and travel restrictions, etc., deal closures have continued at pace,” said TCS CEO Rajesh Gopinathan during the earnings call.
The other Indian IT services behemoth, Infosys, did see the value of its new deal wins come down by 35.5% year-on-year (YoY). However, the company already has the largest deal win in its history in the bag for a whopping $1.5 billion with Vanguard, which will be counted towards next quarter’s deal wins.
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“As the challenges persist, we see clients looking for opportunities to improve the efficiency of their tech spend and we continue to see a robust pipeline of deals in this segment,” said Infosys’ COO Pravin Rao.
HCL Technologies did not disclose the value of its deal wins but did say that it signed 11 new contracts — three less than last quarter and just one deal short of the same time last year.
“Looking ahead, I see very good growth in the pipeline. In the last quarter to this quarter, our pipeline increased by 40%,” said HCL Tech CEO C Vijayakumar.
All in all, the consensus by Indian IT services companies’ is that new deal wins are only set to grow in the coming quarters. The one concern they do have is that the closure of deals is taking longer than usual due to the current circumstances.
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