TCS, Infosys see a spurt in medium-sized deals.

Tata Consultancy Services (TCS) CEO Rajesh Gopinathan is optimistic about the company’s double-digit growth in the fiscal year (FY) 2022. In the earnings call for the quarter ending June 2021, he noted, “The major growth drivers continue to be around core transformation.”

“We have witnessed a solid deal pipeline, which is one of the primary reasons “, Gopinathan expressed his thoughts. In the third quarter, TCS’ order book surpassed $8 billion in total contract value.
It is “well dispersed,” according to Gopinathan, across all markets and contract sizes. “This is also a good sign because growth isn’t dependent on a single type of agreement or a few big ones,” says the author. “Added he.

TCS’ appetite can be gauged by its prior year’s involvement in small and mid-sized purchases. It attracted 29 new clients in the $1 million to $10 million range in the June 2021 quarter and 18 new clients in the $10 million to $50 million range.

It could be critical in a highly competitive market where Infosys quickly establishes itself as the industry leader. In FY2021, the Bengaluru-based firm increased its revenue by 6.1 per cent over the previous year. It brought in $13.6 billion in revenue. TCS gained 1% on a more significant sales base in FY2021, concluding at $22 billion.

Infosys emphasised its significant acquisitions in its June quarter results. It closed 22 important deals for $2.6 billion in the third quarter, with a good mix of businesses and geographic locations. “Large deals” are those worth more than $50 million.

But it was in the small and mid-sized deals that Infosys saw the most action. Since June 2020, Infosys has recruited 48 clients in the $1 million to $10 million range and 29 clients in the $10 million to $50 million range.

“Driven by deal signings, backed by solid transaction pipeline,” Infosys boosted its revenue guidance from 14 per cent to 16 per cent (up from 12 per cent to 14 per cent earlier), according to Nilanjan Roy, the company’s Chief Financial Officer.

Mid-sized agreements dominated the market composition in the June-ended quarter, according to a recent analysis by global technology adviser Information Services Group (ISG), with 17 per cent of awards valued between $20 million and $40 million.

Companies can reduce risks associated with COVID-19 waves by diversifying deal size and location, which are likely to occur in different parts of the world at other times.

The one concern for Infosys will be its attrition rate (13.9 per cent vs 8.6 per cent for TCS). However, in the last year, it has gained traction in terms of deals.