TCS Is Expected To Get A Great Deal Worth $1 Billion.

According to people familiar with the events, Tata Consultancy Services (TCS) is ready to finalize further transactions for $1 billion with British retailer Marks & Spencer in the coming weeks. This deal would be the largest order won by India’s leading software exporter this year, and TCS is also ready to renew its earlier five-year agreement with the UK-based firm.

The competitive edge of TCS.

Apart from the 2018 agreement renewal, an industry official mentioned that Mark & Spencer is set to finalize many other deals worth more than $1 billion. TCS, being a renowned partner, is in the lead to win these transactions. Among the new arrangements in this work are requirements for business process services and digital transformation programs. This engagement is planned to carry over 8-10 years. These gigantic transaction victories are crucial when global corporations are becoming more conservative with their technology investments.

TCS became a significant partner of the global fashion store in 2018. It has subsequently worked on human resource solutions for over 80,000 employees of the British firm, and solutions based on the Oracle supply chain management platform. The Indian IT services exporter was also named a key technology partner for its assistance in transitioning M&S to a new technology operating model.

Some more achievements among other IT service providers.

TCS placed a $700 million plus contract from Phoenix Group in the United Kingdom in February, the largest deal to date this fiscal year. The transaction was the continuation of a $2 billion contract it had secured from the same firm in 2019. 

TCS stated in January that it is seeing an increase in client caution, which is leading to more engagements focused on cost optimization and vendor consolidation. After the termination of its 18-year $1.8 billion IT transformation contract with French supplier Atos, TCS recently took over a project for the UK-based National Employment Savings Trust (Nest). While the organization is still reviewing the new vendor, insiders say TCS is a strong contender for the entire transaction. 

In addition, the business has obtained a contract from Boeing to outsource one-third of the aviation manufacturer’s workforce.

Whereas HCLTech has landed a multi-year agreement to digitize Mondelez International’s security and workplace solutions, and a digital transformation deal with State Farm, among other things. 

Wipro’s five-year multi-million dollar agreement with Mazda Motors and Finastra is one of the most recent large deals won by Indian IT organizations.

Infosys reported signing big orders totaling $3.3 billion during the October-December quarter but provided no more specifics.

Spending on technology is under pressure.

Several businesses are also turning to outsource to save costs and improve organizational efficiencies in a difficult macroeconomic situation. It also projected in December that vendor consolidation deals totaling $160 billion are on the way in the January-March quarter, driven by corporations looking for lower pricing. With the macroeconomic situation worsening, clients have begun to reduce discretionary spending with a greater emphasis on cost optimization. 

According to a recent Motilal Oswal analysis, cost-cutting deals are often longer in length and greater in scale. It was revealed in February that large-cap Indian IT service companies have an advantage when it comes to bagging significant cost-cutting projects.

Many large IT businesses have even reduced staff numbers due to “overestimation” of demand. According to industry analysts, there is a need to examine all renewal negotiations and determine whether they perceive rising components of consolidation or continue to work with the same vendors.

Many of them will remain with the same provider, but at a lower cost or with other benefits. Because service providers are facing substantially greater labor expenses, they will be cautious about these arrangements, according to Phil Fersht, CEO of HfS Research.

According to a technology advisor and the founder of EIIRTrend, Mr. Pareekh Jain, future acquisitions would have both cost optimization and transformation components. He said that there would be a big share of transformation since it helps suppliers optimize delivery costs as well, particularly if they can loop in their platform services.

The last line.

While an uncertain and inflationary climate prevails in the major markets of the United States and Europe, software services providers are seeing an increase in vendor consolidation arrangements from customers motivated by the desire to reduce costs. This comes as global firms seek to concentrate technology investment with fewer providers to benefit from better pricing in the face of deteriorating macroeconomic conditions.

Analysts believe that because of the huge and transformational nature of such acquisitions, Indian service providers like Tata Consultancy Services, Infosys, HCLTech, and Wipro are better positioned to capitalize on these prospects.

Edited by Prakriti Arora