IT companies eye large deals to boost revenue

Software services firms in India are hoping to win more large deals as they capitalise on growing adoption of digital technologies by corporates worldwide, following the business disruptions caused by the pandemic.

Some such as Infosys Ltd and Wipro Ltd have bagged deals worth more than $1 billion each in recent months, underscoring this growing trend.

Bengaluru-based Infosys achieved a record $7.1 billion in large deal wins in the quarter ended December 31. Cross-town rival Wipro separately signed a contract with German retailer Metro AG for an estimated value of up to $1 billion across nine years to drive Metro’s digital transformation agenda.

HCL Technologies Ltd said it signed 13 new ‘transformational’ deals in the December quarter, aided by momentum in its digital, cloud, and products and platform segments. Among prominent large deals, the Noida-based company won a $600-million contract for five years from Swedish telecom equipment maker Ericsson in July 2020.

The recent uptick in large deal wins by Indian IT firms reflects the growing preference for cloud and digital transformation across sectors. During the pandemic, firms began investing heavily in digital technologies to cut costs and improve operational efficiencies. “Large deals are critical to drive revenue acceleration and achieve double-digit growth. 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.”

Of the 22 deals Infosys signed in the past quarter, most were from the financial services sector, followed by a few in verticals such as manufacturing, energy utilities, resources and services sector, communication and hi-tech. Region-wise, 13 were from Americas, seven from Europe and two from other regions. In December, Infosys signed a deal estimated at $3 billion with German automotive giant Daimler AG. That followed a $1.5-billion contract from US investment management firm Vanguard in August.

“We believe it is the largest in the IT services industry in India. This will continue to expand our strong presence in the Continental European markets,” Salil Parekh, CEO and MD, Infosys, said in a post-earnings call with analysts earlier this month.

Wipro chief executive Thierry Delaporte has said that he will be appointing a chief growth officer, a new role focused on driving large deal momentum that has been missing in the company until now.