IT's all about the small deals for big gains

Major Indian IT companies reported growth driven by small and medium-sized deals in the final quarter of last year, even as clients focused on cost savings and consolidating vendors, ToI reported. Decision-making on deals was quicker compared to the previous quarter.

HCLTech CEO C Vijayakumar noted a resurgence in smaller deals alongside a general increase in demand. "The average duration of signed deals is getting shorter, which means the tenure of the deals is coming down. The shift towards shorter tenure deals naturally leads to a moderated total contract value, but the more important metric in this context is annual contract value, which is good on a year-on-year basis. Our annual contract value is up 9% quarter-on-quarter and 23% year on year,” he explained during earnings calls. HCLTech secured 12 deals during the quarter, totaling $2.1 billion in contract value.

TCS also reported $10.2 billion worth of deals. "We achieved significant large deal wins across various markets and industries, resulting in a double-digit growth in TCV year-on-year. This performance is particularly noteworthy given the absence of any mega deal wins,” said TCS CEO K Krithivasan. He added that deals over $20 million saw faster decision-making.


Brokerage firm BNP Paribas observed that both TCS and HCLTech saw increased spending across most sectors, except for life sciences, healthcare, and public services. HCLTech expects growth in annual contract value to outpace total contract value growth due to the emphasis on smaller deals.

(with ToI inputs)