Indian IT sees deal tenures shrinking in rich neighbourhoods
deal tenures for India’s over $250-billion outsourcing industry.
At least two companies – HCLTech and Birlasoft – have gone on record to say that from the usual 10-12 year deals earlier, long-term arrangements are now ending in four years. Earlier, the tenures ranged between 10-12 years.
Elevate Your Tech Prowess with High-Value Skill Courses
Offering CollegeCourseWebsiteMIT xPROMIT Technology Leadership and InnovationVisitIIT DelhiCertificate Programme in Data Science & Machine LearningVisitIndian School of BusinessISB Product ManagementVisitExperts said while clients prefer tenured deals to one-off large discretionary spending, the time window is shorter or the arrangements are coming with stage-gated tenures.
For instance, among large deals (publicly announced in the last fiscal) of Infosys — Liberty Global, Danske Bank and BP — have tenures of five to six years. The Liberty Global deal with Infosys is for an initial 5-year agreement, with an option to extend another three years and more. Even the Danske deal has a period of five years, with an option to be renewed for up to another three years.
Hansa Iyengar, UK-based research firm Omdia’s senior principal analyst for enterprise IT, said: “A quick look shows that more than two-thirds of all contracts over $150mn in TCV that were signed in the past 2 years have a tenure of 5 years or less.”
While Cognizant’s large deal partnership with Gilead is meant for five years for a total contract value (TCV) of $800 million, HCLTech’s Verizon deal spans six years.
C
