Indian IT services companies could be hiding a large portion of the multi-year contracts in the $100 million to $500 million range that will be up for grabs, they added.
This comes as global corporations look to consolidate technology spending with fewer suppliers and benefit from better pricing amid worsening macroeconomic conditions.
The new contracts could be worth nearly a fifth of the $800 billion global IT services business, said Ray Wang, founder of Silicon Valley-based Constellation Research. “We see big deals coming back in Q1 (FY24),” Wang told ET, adding that the nature of the deal is not limited to sectors such as banking or retail, and there could be “deal consolidation” in 2023.
Most of the work will come from US corporations, with a few from Europe and the Asia-Pacific region, although high inflation and recessionary trends in the US and Europe are forcing software buyers to consolidate costs, with financial services and consumer products companies at the top of the pile.
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Large outsourcing deals have been the bread and butter of Indian IT. In the post-pandemic era, clients are now more open to deals they’ve been putting off for more than two years, software exporters said.
HCL CFO Prateek Aggarwal told ET that several clients who had only “extended old business with existing service providers” are now in the market for new service providers.
“They didn’t want to take the risk of switching suppliers in the middle of a pandemic.” But now most customers are done with Covid and obviously there is a need for savings to feed either the digital work or the growth work they want to do,” Agarwal said.
C Vijayakumar, the company’s CEO, quoted ISG as saying that over $122 billion worth of supplier consolidation opportunity will arise in the next 2.5 years.
Mails sent to TCS and Infosys remained unanswered at the time of going to press.
Tech Mahindra CFO Rohit Anand said the company’s large pipeline is “one of the best” in the last five years as the company focuses on growth areas such as 5G and customer experience management, among others. Cognizant said it sees some big business opportunities as companies “rethink their workflows and business processes with automation.”
In response to ET’s queries on which segments would drive the big deals, the company said, “We believe digital transformation will drive the growth of the IT industry in the years to come and we expect vendor consolidation to continue for some time to address to requirements for cost efficiency. , automation.”