From TCS To Tech Mahindra, Record Deals Cheer IT Firms In Sept Quarter

TCS, the largest, attributed differentiated capabilities for its $4.9-bn deal TCV, of which $1.5 bn came from banking, financial services and insurance (BFSI) and $0.7 bn from retail.

The September quarter’s financial results of information technology (IT) majors have delivered festive cheer, at least on the deals front.

Most of the majors saw impressive order booking, reporting deals with a record amount in total contract value (TCV). Tech Mahindra, for example, reported an all-time high in net new deal wins, with a TCV of $550 million. Infosys recorded its best ever large deal wins in a quarter, with a TCV of $2 billion (the previous highest was $1.2 billion), almost 63 per cent of which were new deals. Tata Consultancy Services (TCS) reported quarterly large-deals (new deals and renewals) with $4.9 billion in TCV (compared to $4.8 billion in the June quarter).

Wipro did not disclose this number but indicated a good quarter of order booking. “A stronger demand environment was helped by a continued increase in digital sizes, aided by a shift in spending to core transformation and integrated digital deals, as opposed to a consulting-heavy phase earlier. Also, continuing momentum of deals signed that will flow into revenues in the early part of the year,” said Kanwaljeet Saluja, analyst, Kotak Institutional Equities.

Tech Mahindra (fifth-largest among IT service companies) said it was seeing very interesting deal wins, with clients embarking on transformation plans.

“We are winning synergy deals which balance out the revenue streams on a quarter-on-quarter basis. Looking at the deal win composition, on the enterprise side, the whole customer experience management and integration of some of our platforms to deliver solutions in the customer experience area has been a big component,” said Manoj Bhatt, its financial head, during a post-earnings meet.

Nirmal Bang analyst Girish Pai says the deal wins posted by Infosys were helped by an excellent demand environment and aggressive bidding. With the $700-million Verizon deal, Infosys, which does not have a strong communications portfolio, has managed to enter a space occupied largely by TCS and Tech Mahindra, he added. “Clearly, the market is in good shape. As we shared earlier, our view is the demand environment is quite strong across many of our large sectors. We see good demand across all the geographies; we see stable demand,” said Salil Parekh, chief executive at Infosys.

TCS, the largest, attributed differentiated capabilities for its $4.9-billion deal TCV, of which $1.5 bn came from banking, financial services and insurance (BFSI) and $0.7 bn from retail. Half of all deals it signed by value terms came from North America.

Pune-based Persistent Systems, despite negligible revenue growth in the quarter, said the demand pipeline looked very robust and was confident of a bounce-back, with very strong growth in the second half of 2018-19. It is seeing strong demand on the digital side, it says, especially in the health care vertical, with bigger deal sizes compared with the earlier period.

Zensar reported bookings with TCV of $290 million in the first half of FY19, of which $120 million was in the September quarter. Among the other midsize IT firms, Hexaware and Mindtree said they expected a softness in new deal closure.

Mindtree won deals worth $271 million, of which $225 million were renewals and $49 million in new deals. The company indicated some delay in new deals from the US and Europe had impacted its revenues, though it was expecting to see this recovering in the December quarter, despite seasonal weakness. – Business Standard

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