More Verizon-like big deals in pipeline: HCL

economictimes.indiatimes.com:

HCLTech expects to sign more large deals, on similar lines as the $2.1 billion contract from Verizon announced on Thursday, in the next two-three quarters, chief financial officer Prateek Aggarwal told ET, as companies double down on cost optimisation amid macroeconomic uncertainty.The Verizon deal, the largest ever for the Noida-headquartered firm, “is consolidation of the work done in-house as well as done by several other service providers”, said Aggarwal. “More than 50% of the large deals currently are the cost-optimisation type of deals.” HCLTech, the country’s third-largest software services firm, has a number of deals in advanced stages in its pipeline, he said.

These large deals are providing a much-needed impetus for Indian IT companies, which are facing a demand slump that’s among the worst since the pandemic. The Verizon deal is worth almost 2% of the company’s FY23 sales.Deal to boost HCLTech’s H2 Revenue from the deal will start flowing in from November, giving HCLTech’s second-half performance a bigger boost relative to peers, an analyst said.

“Assuming equal distribution of revenues across the tenure, this deal can add $130-140 million (around 1.1% to fiscal 2024 revenues),” said a report by Kotak Institutional Equities on Friday. Aggarwal said: “There are other large and mega deals which will take whatever time is normal for them to fructify.

Obviously, we may not win all of them but certainly hope to. That’s how the pipeline works.” This is the largest deal for the company after the $1.3 billion Xerox renewal in 2019.

Large IT providers have been announcing mega deals. Infosys signed a $2 billion, five-year deal with a large unnamed client and signed up a $1.5 billion project from British energy major