Despite the last quarter lacking mega deal announcements, Indian IT companies have shown strong performance by leveraging their partnerships with top clients. They generated revenue through additional demands from existing clients, restarted backlog projects, and focused on maximizing opportunities with their major clients. This strategic approach led to a significant increase in revenue contributions from top clients in the second quarter.

  • HCLTech: The top 20 clients, who contributed 27.3% of revenue in Q2 of the last fiscal year, now contribute 30.8%, an increase of 350 basis points (where 100 basis points equal 1%).
  • Infosys: The top 10 clients are contributing 1% more than they did in the same period last year.
  • Wipro: The top 10 clients now contribute 22.9% of revenue, up from 20.6% in the corresponding period of the previous year.

Insights from Industry Leaders:

  • C Vijayakumar, CEO of HCLTech, mentioned during the Q2 earnings call that the company is seeing additional demand from existing clients, especially due to rate cuts.
  • K Krithivasan, CEO of TCS, stated that optimism comes from backlog work that some customers couldn’t continue because of the current economic environment.
  • Peter Bendor-Samuel, CEO of Everest Group, noted that the acceleration in small deals is driven by businesses wanting to unlock value from existing digital investments made before and during COVID-19. Companies are investing further but on a smaller scale due to caution around the macroeconomic situation.
  • Salil Parekh, CEO of Infosys, observed that smaller-sized deals, which doubled in Q2, positively contributed to the company’s growth.
  • Nitin Rakesh, CEO and MD of Mphasis, highlighted that clients with ongoing programs are willing to fund the next phase and aim to complete it within 6 to 12 months.

Mega Deals Becoming Less Frequent

Top IT executives like Krithivasan and Parekh pointed out that large and mega deals are becoming more irregular. Analysts suggest this could mean a slowdown in deal announcements for a quarter or two, followed by a surge in the following quarter.

  • Pareekh Jain, CEO of EIIRTrend, explained that closing mega and large deals is taking longer due to lengthy sales cycles in the uncertain macroeconomic climate. He added that clients are hesitant to commit to long-term or high-value deals because of the growing maturity of AI and a trend toward insourcing.