Business

$116bn-worth IT contracts up for renewal in 2017

15 Dec 2016 | By Ramya Patelkhana
Indian Information Technology services companies

Indian companies in the Information Technology services sector have been steadily increasing their share in global IT outsourcing.

About $116bn-worth of IT contracts is going to be up for renewal in 2017.

With growing trend towards splitting up bigger deals, the companies could look forward to more gains in the next year.

The data is compiled by IT advisory firm, Information Services Group (ISG).

In context: Indian Information Technology services companies

15 Dec 2016$116bn-worth IT contracts up for renewal in 2017

Service ProvidersTop five Indian IT companies account for $20 billion

According to ISG's data, of the $116 billion, the top five Indian IT service providers account nearly for $20 billion.

The top five US firms (IBM, Accenture, CSC, HP, Xerox) account for $29 billion.

The biggest four European companies (Capgemini, Atos, BT, T-Systems) account for $17 billion.

The remaining is divided among other smaller Indian and global IT service providers.

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Trends than can change the way of contract distribution

TrendsTrends than can change the way of contract distribution

Two new trends can change the way of distribution of contracts.

Customers now split larger contracts ($1bn-range) into smaller deals.

Indian firms have been traditionally weak in large deal space, but the splits could be an advantage for them.

The second trend is the growing digital scope of deals; cloud, analytics, automation are key to IT contracts, which also reduce the total contract value.

ISG Head Dinesh Goel's statement

"While the net impact of this trend (digital scope) may not be accurately estimated, we expect this would result in ACV (average contract value) drop of 20-30% depending on the nature of deals and possibility of inclusion of disruptive solutions like cloud and automation."

Global ShareIndian IT companies' share in the global sourcing market

According to ISG, Indian IT services' gains would greatly depend on how well they adapt to the new digital world in compared to their global peers.

According to NASSCOM, Indian IT companies' share in the global sourcing market steadily increased to 56% in 2015 from 45% in 2009.

The global sourcing market increased 9% to $234-239 billion in 2015 from $215-221 billion in 2014.

Incumbent service providers

47% of the times, incumbent service providers lose the entire scope of work, and 32% of the times, the incumbent loses noticeable scope of deal. Goel said, "It becomes increasingly important for incumbents to reconsider their approach to retaining and growing their key accounts effectively."
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Indian CompaniesIndian IT service companies' contracts

TCS's $500mn-worth contract with the UK-based life insurance fund consolidator 'The Phoenix Group' is going to be up for renewal in 2017.

Tech Mahindra is the incumbent vendor of $500mn-worth BPO deal of Hong Kong billionaire Li Ka Shing backed Hutchison Whampoa.

Dutch mobile company Royal KPN and Aircel's $500mn deal each with Tech Mahindra and Wipro is going through a competitive bidding process.

13 Jan 2017Infosys, TCS profits up in Q3

TCS registered a 0.3% rise in dollar revenue ($4.39 billion) while its net profit rose 1.6% to touch the $1 billion in Q3 of the current fiscal.

Meanwhile, India's second largest software firm Infosys reported a 7% growth in its consolidated net profit (Rs.3,708 crore) and an 8.6% rise in its consolidated revenues (Rs.17,273 crore) in the third quarter.