TCS, Infosys, Wipro, HCL Fail To Get Mega-Deals Worth $100 Million And More: Here’s The Reason Why?
The top four Indian IT services companies — Tata Consultancy Services (TCS), Infosys, Wipro and HCL Tech have been seeing their mega deals slow down through the past few quarters.
Danger of economic uncertainty
In particular, large deals of over $100 million and mega deals shooting past $400 million.
This indicates the reluctance among clients in an increasingly uncertain macro environment.
Despite the bullish business outlooks of these companies, analysts have said clarity on larger deal wins will only emerge after the first quarter of 2023.
According to data from CareEdge Research, there was no net new QoQ client addition for the $100-million-plus revenue bracket across the big four in the second quarter.
Understanding this trend
According to Phil Fersht, CEO and Chief Analyst, HFS Research, the days of the mega deal are pretty much over and have been for a while now.
Basically the sudden surge in demand and digital transformation deals across sectors for IT services companies that marked the last two years is now starting to cool down.
With caution, all the companies remain bullish on client spending and demand outlook for large deals in the upcoming quarters.
Large deals at this company are deals in the $50 million-plus revenue band.
CEO Salil Parekh said during the Q2FY23 earnings that the company had begun a pivot towards cost-focussed programmes within the large deal pipeline.
Its guidance, which was 14% to 16% earlier, “are now moving it to 15% to 16%, which is the higher end of that band.”
C Vijayakumar, CEO and MD, said, “…since January, we have increased prices and we continue to win deals, which are at a higher margin than what we would have won in the previous fiscal.
And when you win large deals … depending on the deal size, we’ve generally been engaged in deals where we don’t have to take any major upfront kind of investments, that’s been the strategy as well.
So, there’ll be a little moderation to start with and then the margins will pick up in large deals.”
Although it won two mega deals of almost a billion dollars each in Q1, the pattern did not continue in Q2.
CEO Rajesh Gopinathan said, “We don’t have any mega wins, the largest one is in that range of 400 million and we have a few in that plus minus range.
Deal wins are large but nothing above 500 million per se to call out.”
CEO Thierry Delaporte said it is undergoing a real shift in the market as clients increasingly turn to them”.
He expressed confidence that the company will gain market share in the coming quarters.
He is looking to “continue” its fresher strategy, continue progress on automation where it has made significant investment, continue to pursue “deals delivering more value, and not only going after volume.”
[…] Source link […]
Comments are closed, but trackbacks and pingbacks are open.