IT companies look forward to $116 billion contracts in 2017

The IT players in India have been doing good in the past few years and are reportedly growing while steadily increasing their share in global IT outsourcing. Now with $116 billion worth of IT contracts coming up for renewal in 2017 and the growing trend towards splitting up large deals, the companies can look forward to some more gains in the coming year.

The top five players in the sector account for $20 billion, the big five American companies (IBM, Accenture, CSC, HP , Xerox) account for $29 billion, and the top four European firms (Capgemini, Atos, BT, T-Systems) account for $17 billion. The remaining is split among a host of other smaller global and Indian providers, according to data from IT advisory firm ISG.

The trends that have the potential to change the way the contracts have till now been distributed are customers are tending to split large contracts -those in the $1-billion range -into smaller deals. Indian companies have traditionally been weak in the large contract space. So, any split should work to their advantage. The other trend is the increasing digital scope of deals -cloud, analytics and automation are becoming key parts of IT contracts coming up for renegotiation. This also reduces the total contract value (TCV) available on these deals.

"While the net impact of this trend may not be accurately estimated, we expect that this would result in ACV (average contract value) drop of 2030% depending on the nature of deals and possibility of inclusion of disruptive solutions like cloud and automation," Dinesh Goel, head of ISG, told ET.

This means Indian IT services' gains will depend to a great extent on how well they have adapted to the new digital world in comparison to their global peers.