IT companies see revival in discretionary demand, deal wins

In Q3, the country’s largest IT services company Tata Consultancy Services’ (TCS) total contract value (TCV) stood at $10.2 billion.
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Representational image.
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BENGALURU: IT services companies have now started witnessing early signs of revival in discretionary spending and CEOs of top IT companies are optimistic about strong deal wins in coming quarters. Also, they announced that deal cycles have now shortened compared to previous quarters.

In Q3, the country’s largest IT services company Tata Consultancy Services’ (TCS) total contract value (TCV) stood at $10.2 billion. “For the first time, there is a good decrease in the deal cycle, by a few weeks. This shows that the decision-making is also improving largely,” said K Krithivasan, Chief Executive Officer and Managing Director, TCS, during the company’s earnings call.

He added, “With the reduction in the interest rates, easing of inflation, and reduced uncertainty with the new US administration taking over, we expect the discretionary demand to strengthen. And seeing the (early signs) revival in discretionary spend and the strong TCV win give us more confidence in CY ‘25 and FY’26.”

Infosys’ TCV of large deal wins was at $2.5 billion in the third quarter. Wipro has booked large deals worth $961 million in the third quarter.

In post-earnings press conference, Srini Pallia, CEO and Managing Director, said, “2024 was marked by macro-economic challenges and 2025 looks more hopeful and resilient. Our clients are cautiously optimistic and we see discretionary spending slowly coming back.” Sachin Alug, CEO, NLB Services, said despite these challenges, the spending environment has shown steady improvement, with companies expressing optimism about sustained growth in the coming quarters.

Apart from winning AI deals, IT companies are focused on upskilling employees. Pallia said Wipro continues to invest in AI education as 50,000 of its employees now hold advanced AI certifications. “Beyond skilling, we’re investing in AI tools and platforms across the software development cycle and our internal processes,” he added.

IT companies focus on upskilling employees

Apart from winning AI deals, IT companies are focused on upskilling employees. In Q3, the country’s largest IT services company Tata Consultancy Services’ (TCS) total contract value (TCV) stood at $10.2 billion. Infosys’ TCV of large deal wins was at $2.5 billion in the third quarter.

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