Indian IT Firms Winning Big Deals, Clients This Year; Tech Veteran Claims Business Will Increase
Amidst the COVID-19 pandemic, India’s IT companies reported more deal wins and renewals than pre-pandemic times in the Q1 of the fiscal year 2020, led by cloud and cyber security businesses.
HCL Technologies President and CEO C Vijayakumar, in an interview said, “The (deals) pipeline has increased 40% compared to the March quarter citing the vendor consolidation and digital and cloud modernization efforts of customers.”
Read on to find out more…
Q1 Witnesses Deal Wins And Deal Renewals For Many Indian IT Companies!
Experts said that many Indian IT firms have successfully won deals across their strongest offerings, despite client curbs on non-mandatory expenditures.
Midcap IT firms like Mindtree Ltd and L&T Infotech Ltd have pulled off large deals and renewals in areas dominated by tier-I IT firms, who have advanced to larger digital transformation deals.
Pareekh Jain, IT outsourcing advisor and founder, Pareekh Jain Consulting said, “The distinction between renewals (same client, same project) and new or additional deals with the same clients is reported differently across companies. However, a shift towards increased work from home-related solutions is driving a lot of value added deals for IT firms at present. The tier-1 firms will be in a better position to take advantage of it because of long-standing relationships with these clients as well as the fact that they are better placed to negotiate pricing against volume of contract.”
The Mindtree management said deal signings in the Q1 were maintained at the Q4 run rate of $391 million. Unlike in the fourth quarter when the firm reported an equal and healthy blend of 52% renewals and new 48% deals (48%) the deal signings in the first quarter were suddenly directed toward 80% renewals. On a year-on-year basis (Y-o-Y), deal signings improved around 21%.
Tier-I Companies Also Score Deal Wins and Share Gains!
In the first quarter, Infosys reported an almost equivalent figure of $1.7 billion compared to its average quarterly wins since Q1FY20 figure of $2 billion. Out of 15, 5 of its big deals were in core banking, financial services and insurance. After it reported its Q1 earnings, Infosys shares have gained 10%.
HCL Technologies on July 17 reported 11 net new transformational deals in telecom, financial services, manufacturing, life sciences and healthcare sectors.
President and CEO C Vijayakumar said, “We saw topline decline in the June quarter and that is largely due to COVID impact. If we look at the future, we will continue to do quite well, our bookings are good. ”
He added, “Due to the pipeline increase and good bookings, we are confident that the worst is behind us, and we are going to see a good growth trajectory from here on. We have given a guidance of an average 1.5-2.5 % growth every quarter for the next 3 quarters.”
HCL Technologies’ CEO Says Tech Services In Demand During The Pandemic!
There is a strong demand for tech services in the unprecedented pandemic times as technology has been crucial in aiding many businesses to thrive and survive. He says as a result there is a lot of emphasis on the importance and resilience of tech infrastructure and business applications.
C Vijayakumar said, “That is a positive aspect from a tech services perspective and that is also driving some demand trends to investing in faster cloud migration, cybersecurity, analytics, Internet of Things – all of these are only going to get accelerated due to the situation that has emerged post-COVID-19.”
He added that the company is taking part in a lot of digital initiatives and cost transformation programmes which are in the market.
He predicts that companies involved in sectors like energy, manufacturing and auto will see slow recovery while others like technology, telecom, life sciences, financial services will continue to grow.
On strategic development of the software business and Q1 growth of the company he said, “We have set up a very good platform for the software business which is global in nature, with a large number of customers and we have a very good portfolio of products which is going to do well in this environment more than ever. We are investing close to $200 million in research and development every year, in modernizing these products and bringing out new versions and features, built upon requirements of users. This will also help us gain some more traction in the HCL software business.”
C Vijayakumar denied any major changes in the business strategy of the company. Although he said, “But as the business evolves, there is some fine-tuning that happens. We continue to place emphasis and importance on execution and that is what really differentiates HCL. Keep the strategy simple and focus on execution.”