IT cos win record large deals as demand for digital spikes

Top Indian IT services companies have clocked the highest-ever large deal wins during the fourth quarter ended March as demand for digital services continued to rise among enterprise clients. The large deals helped these firms post strong revenue growth in a seasonally weak quarter.

Digital transformation deals are a result of companies moving to a digital business model to stay competitive by adopting newer technologies. Such deals have seen a 30% jump since the beginning of the pandemic, according to a Nasscom-McKinsey report.

Tata Consultancy Services Ltd (TCS) reported its highest quarterly deal closure of $9.2 billion for Q4. For FY21, the order book stood at $31.6 billion, up 17% year-on-year. Strong deal wins and a robust deal pipeline would ensure double-digit revenue growth in FY22, the management said after the results.

The total contract value (TCV) of net new deals of HCL Technologies Ltd hit an all-time high of $3.1 billion for Q4. It won 19 new large deals across industry verticals including financial services, life sciences and healthcare, consumer goods and manufacturing. In FY21, it signed 58 large deals and the new deal TCV stood at $7.3 billion, up 18% from a year earlier.

“The booking and pipeline represent a well-balanced mix of service lines, geographies and industries,” said C. Vijayakumar, president and CEO, HCL Technologies.

Infosys Ltd’s large deal TCV for the fourth quarter stood at $2.1 billion, while the TCV for FY21 peaked to an all-time high of $14.1 billion with 66% being net new. Large deals won during FY21 included a $3-billion deal with German automotive giant Daimler AG and a $1.5-billion deal from US investment management firm Vanguard.

“Our intense focus on client relevance, growing our digital portfolio with differentiated capabilities like Infosys Cobalt and empowering employees have helped us emerge as a partner of choice for our global clients. Our record large deal wins stand testimony to the effectiveness of this approach,” said Salil Parekh, CEO and managing director, Infosys.

Wipro Ltd has won 12 large deals with a net new TCV of $1.4 billion for the March quarter and $7.1 billion for 2HFY21. Wipro is building a large deals team across the organization to tap into opportunities in both new and existing accounts and take this to the next level.

Wipro’s significant deals include a contract with German retailer Metro AG for an estimated value of up to $1 billion across nine years. In February, it won a five-year IT transformation contract from Telefónica Germany to help the telecom company modernize and launch a range of new offerings, including 5G products and services.

Large deals are critical for IT services companies to drive revenue acceleration and achieve double-digit growth, according to analysts.

“The size and complexity of large deals will only increase in the days to come,” said Nitin Bhatt, technology sector leader at consulting firm EY India. “Large deals have a different DNA. They require a different risk appetite, investment ability, commercial construct, and the need to leverage an ecosystem of partners to create long-term value for customers.” Livemint