Indian IT firms have been among the biggest beneficiaries of the IT deal consolidations in the last two years and at least half of the top global deals were snagged by Indian IT players, a report by Economic Times stated.
Quoting HfS Research’s data, the ET report noted that Infosys won a $3.2 billion deal from Daimler and a $1.5 billion deal from Vanguard. Meanwhile, TCS bagged a $1.5 billion deal from US retail and wholesale pharmacy major Walgreens Boots Alliance (WBA), and more recently a $2.3 billion deal from US consumer research firm Nielsen. Also, Wipro won a $700 million contract from German wholesaler Metro, informed the report.
Phil Fersht, CEO of HfS Research, said "consolidation deals are usually contracted renewals where services are consolidated under a smaller number of providers. Many customers are moving away from a long tail of service providers to sharpen service offerings and accountability, besides trusting IT partners who can take out dollars from the run-the-business side, and pour the cost savings to new digital initiatives."
The report further pointed out that mega deals are often margin dilutive initially, but Indian IT firms have cost optimisation and operational levers to make it margin accretive over the long tenure of the deal.
TCS is said to have recently further consolidated its business in MetLife, winning a larger pie from other IT players, including some part of the business from Cognizant, added ET. It highlighted that TCS CEO Rajesh Gopinathan in the June quarter commentary had said that it had won two $400 million deals in the quarter and both the deals resulted from a massive consolidation exercise.
TCS's Walgreens deal is spread over ten years. The company is implementing a new IT operating model that will enable the US retailer to accelerate its digitisation programme, noted ET. Meanwhile, it added that Wipro's five-year Metro deal was CEO Thierry Delaporte's largest, and analysts believe it has the potential to go up to $1 billion.
