TCS says no footprint of recession in the near-term, but deal sizes are shrinking
- TCS did not win any billion dollar deal in the June quarter, with new deal wins down to $8.2 billion from $11.3 billion in the previous quarter.
- Instead, its deal win size was considerably smaller this time, with only two $400 million wins.
- The rest, TCS says, consisted of small and medium sized deals, suggesting that companies are tightening their purses amid recessionary concerns.
AdvertisementThe stock markets have been pricing it, the bears have been riding on it and now even the commodities are reacting to it — a possible recession in the US and Europe.
But India’s largest tech company, which could be most affected by it, seems to see no effect — not in the near term at the least. Rajesh Gopinathan, the CEO of TCS said that they are closely following the ‘R’ talk with the information mostly from the newspapers.
“We are having serious discussions around it (recession). But we do not see an immediate footprint of it in the near term,” he told reporters at the company’s earnings press conference.
Long before the recession however, the fear of recession has set in along with that of various macro economic models like stagflation, slowflation, the classic slowdown and more.
It looks like some, at least some of these fears are having an effect on the size if not quantity of deals bagged by this IT major. For one, it did not win any billion dollar deals in the June quarter. The biggest it won are two $400 million deal wins.
Though to be fair, it won as much as $8.2 billion worth of deals in the quarter. But this too is much lower than the $11.3 billion orderbook it bagged in the last quarter before. Possibly, the big companies are tightening their fists or spending on IT but spending lower.
The company clarified in the press conference that the $11 billion number from the previous quarter was marked by two big deal wins. Expecting that to continue is “difficult” – whether it’s difficult to replicate or such deals are becoming rare in the market – is left unknown.
“I think it is safe to assume that we will be in the $7-9 billion range. This quarter, two $400 million deals were the largest we had. Otherwise, it is a combination of small and medium-sized deals. That trend is likely to continue,” said NG Subramaniam, chief operating officer and executive director, TCS.
TCS revealed that its retail segment grew the fastest, and healthcare is now on the backburner again, coming in at the end. BFSI segmented its top spot like it has always been.
Source: Company reports
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