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IT cos upbeat on Q4 as well

Large firms banking on good momentum in their deal pipeline

IT cos upbeat on Q4 as well
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IT cos upbeat on Q4 as well

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Robust Deal Pipeline

- Wipro signed 9 deals worth $580mn from $715mn in same period

- HCL signed 14 deals; its TCV at $2.3bn

- Tech Mahindra $3-bn worth new deals

- Infy in Q2 won 22 deals worth $2.15bn from $2.6bn in Q1

- But TCS' TCV declined from $8.1bn to $7.6bn

Experts are of the opinion that the deal momentum is likely to continue though there were no big announcements with regard to mega outsourcing contracts in Oct-Dec period

Bengaluru: As the large IT services companies are all set to announce their third quarter results this week, most companies are likely to report sound ramp up in the outsourcing contracts that they have clinched earlier.

Analysts are of the opinion that deal pipeline for the fourth quarter and ahead, will be the key factor to watch out from this quarterly results.

"We expect companies to report healthy revenue growth in this quarter led by lower furloughs, ramp up of deals won in the previous quarters," ICICI Securities wrote in a note.

"In the current quarter, key thing to watch will be improvement in deal pipeline, upgrades in revenue guidance," it added.

In the second quarter, most large firms have witnessed good momentum in their deal pipeline despite mega deals giving a miss.

In the quarter ended September, Infosys won 22 deals worth $2.15 billion, compared with $2.6 billion in the previous quarter. Total contract value (TCV) of Tata Consultancy Services (TCS) was at $7.6 billion during the second quarter, down from $8.1 billion in the June quarter. Wipro signed 9 large deals this quarter with TCV of around $580 million as compared to $715 million in Q1.

Similarly, HCL Technologies' TCV for the September quarter stood at $2.3 billion with 14 large deal wins.

Experts are of the opinion that the deal momentum is likely to continue though there were no big announcements with regard to mega outsourcing contracts in October-December period.

"IT firms have seen large number of smaller deals resulting in a robust pipeline in the second quarter. It is to be seen whether this trend continues during the third quarter. Because, it will give a good indication of the fact that whether the revenue growth momentum continues for this fiscal and beyond," said Pareekh Jain, an outsourcing advisor & founder, Pareekh Consulting.

Not only large IT services companies, but mid-tier IT firms are also likely to see a good pipeline of deals in the third quarter.

"Tech Mahindra is rapidly building up scale and momentum through its focus on large deals. The

company won $3 billion of net new deal wins in LTM (last twelve months)," ICICI securities said in a recent report on Tech Mahindra.

Apart from Tech Mahindra, L&T Infotech, Mindtree, Mphasis, & Coforge among others are also expected to report rise in deal pipeline in the third quarter.

Debasis Mohapatra
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