$1 bn Telefónica UK win ends mega-deal dry spell for TCS but it's not out of the woods yet

Tata Consultancy Services Ltd (TCS), India's largest software services company, has won a mega deal valued at more than $1 billion revenues over 10 years from Telefónica UK, the British arm of Spanish telecom giant Telefónica, ending a nearly two-year drought in bagging such large deals.Telefónica UK runs the O2 brand of mobile phone services in the UK.Mumbai-based TCS will offer application and infrastructure work as part of this contract, much of which is new work for the company, said two executives privy to the development requesting that they remain unidentified in this story. A formal announcement is expected in the coming weeks.This is the fourth $1-billion deal, all in the UK, under managing director and chief executive officer (CEO) K.

Krithivasan who took office in June 2023. That same month, TCS signed a $1.1 billion contract with UK National Employment Savings Trust, which is the UK’s largest workplace pension scheme.

Three months later, it won a $1 billion digital transformation contract with Jaguar Land Rover; both the automaker and TCS are part of the Tata Group. Finally, In January last year, the company bagged its largest deal—a $2.5-billion, 15-year administration contract with British insurer Aviva.The UK is the second-largest market after the US for TCS making up about 17% of its full-year revenue of $30.18 billion.Questions sent to TCS and Telefónica went unanswered at the time of publishing.Both the executives cited earlier pointed to the muted profitability in the Telefónica UK deal, claiming it is lower than TCS's 24.2% operating margin.