Stock Analysis, IPO, Mutual Funds, Bonds & More

Tech Mahindra sees a return to days of larger deals

​​Tech Mahindra’s CFO told that deal sizes on an average had been moving upwards, and it was likely to continue.

, ET Bureau|
Updated: Oct 03, 2019, 10.37 AM IST
Getty Images
Last month, the company signed a multiyear contract with the US telecommunications firm AT&T, estimated to be worth about $1 billion and one of its largest deals.
PUNE: Tech Mahindra is seeing a revival in large deals, as companies move towards bigger transformation projects, India’s fifth largest IT services firm said.

Tech Mahindra’s chief financial officer Manoj Bhat told ET that deal sizes on average had been moving upwards, and it was likely to continue.

Last month, the firm signed a multi-year contract with US telecommunications firm AT&T, estimated to be worth about $1 billion and one of its largest deals.

“There had been slowness in large deals with the communications industry lowering spends in the last few years. Now, with digital coming into play, they are thinking about how to save money and undergo a digital transformation,” Bhat said.

Across industry sectors, companies had started their digital transformation journeys with smaller, customer-facing functions where it would have the highest impact, but they are now expanding its scope, Bhat said.

“Companies are looking at driving benefits through transforming their applications portfolio and digital is becoming larger and more mainstream,” he added.

There has been resurgence in large deals among tier 1 software services providers in the last few months, many of which are spread over a longer duration, which enables the service provider to make investments, said Pareekh Jain, founder of Pareekh Consulting.

“These are transformation deals with combination of digital and legacy. Service providers are leveraging their investments in solutions, reusable assets to create value for enterprises, reducing both time and cost,” he said.

Digital may include Cloud, SaaS, automation, security, IoT, analytics, AI, mobility and customer experience, he added.

The rollout of 5G is also expected to result in more long-term deals.

While Tech Mahindra expects the next year to be focused on pilot 5G projects, the actual implementations are likely to happen in financial year 2021.

“These will be spread over a 5-7 year cycle as against a shorter one for 4G,” Bhat said.

It would start with the actual rollout, following by software defined parts – the configuration and set up. Last would be the enterprise aspect.

“As the rollouts slow down, the enterprise IoT will start picking up, so this would happen over a longer time period,” he said.

Within the Tech Mahindra framework of ‘run, change and grow’, Bhat said that till recently it was primarily ‘run’, or using automation and artificial intelligence, that clients were interested in.

Now, however, it is a combination of different aspects, of change (changing the main systems to drive transformation and benefits at scale) and run, he said.

“There is more certainty around technology adoption roadmaps and the experiments are now stabilizing across customers,” he said.

Also Read

Wipro to deliver above 3% sequential growth in Q4 backed by larger deal wins

Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links

Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service