IT companies strike it rich with mega deals

BENGALURU: After a hiatus, there’s now a rise in multi-billion dollar deals in IT services. These involve both asset and people takeovers from the customer, and the objective is to cut costs. The top four Indian IT firms – TCS, Infosys, Wipro and HCLTech – collectively booked deals worth nearly $20 billion in the June quarter, with TCS accounting for about half of that. A good part of that has come from large deals. Managements of top IT firms have called out several mega deals in recent weeks.
Infosys has expanded its partnership with global telecom major Liberty Global in a deal valued at 1.5 billion euros over the initial five-year term, and at 2.3 billion euros if the contract is extended to eight years. The companies expect the collaboration will allow Liberty Global to realise run-rate savings of more than 100 million euros per annum. More than 400 Liberty Global employees will join Infosys.

Prior to Liberty, Infosys won a deal from an existing strategic client to provide AI and automation-led development, modernisation, and maintenance services. The company said the total client target spend over five years is estimated at $2 billion.
TCS has won a contract from Nest, UK’s largest workplace pension scheme, which has offset some of concerns that arose from the company’s recent loss of part of the over $2-billion deal from Transamerica. The Nest contract is worth 840 million pounds with an initial tenure of 10 years. There’s an option to extend the tenure by eight years.
HCLTech recently won a $2.1-billion deal from Verizon Business that includes deployments involving managed network services for enterprise customers. Large deals of this nature are good for companies given that they lock-in the customer for long periods. However, analysts say decision-making cycles are still longer than usual because of global macroeconomic concerns, and how much of the revenue from these deals will come in the immediate future remains to be seen.