“It is a renewal of an existing contract. Incrementally, this contract is just adding a few hundred millions to the existing deal,” said Ravi Menon, analyst at Elara Capital.
As part of the contract, TCS will globally provide Nielsen with professional services relating to IT, including application development, maintenance, business process outsourcing, financial planning and analytics, among others.
This is the largest deal win for TCS since Rajesh Gopinathan took the company reigns in February this year.
“What we are seeing is that some deals are starting to come which are of significant size and some of them are coming in unexpected areas as well... In more traditional ones like cloud and other areas, deal sizes are significantly increasing,” Gopinathan had said during the last quarterly investor call.
The deal comes at a time the IT sector is rapidly switching to digital services where deal sizes are much smaller.
Indian IT players comprised 67 per cent of the global IT market in 2016 (60 per cent in 2012). However, incremental gains are expected to be at a slower pace.
Back in 2015, TCS had announced that Nielsen had selected TCS’ software as a service platform Ignio to cater to their operational and IT management services.
Bloomberg’s outlook for the sector in 2018 noted that consulting-focused companies
with large next-generation practices such as Accenture and Cognizant are likely to grow faster than the industry. Offshore vendors will gain market share comparatively at a slower pace due to pricing pressure on legacy IT work and greater immigration-related scrutiny, the report stated.
Analysts, however, noted that while the overall deal size is large, the existing contract and length of partnership does not make it a very significant deal in the long run.
Earlier this month, credit rating firm ICRA had noted that Indian IT services firms will see reduced margins in the next two years as they face the challenge of increased competition for deals, growing automation and the limited number of newer opportunities.