While Indian IT companies are signing large and mega deals, they have witnessed a fall in the number of their clients in the just concluded quarter.
TCS is an outlier that didn’t see any decline in its number of clients but the next big five have seen the loss of clients, who gave them business worth over $550 million.
In a span of just one month, both Tata Consultancy Services (TCS) and Infosys announced the signing of mega deals worth $1 billion each. Even HCLTech and Wipro, the third and fourth largest Indian IT service companies, have reported in their quarterly earnings of signing more number of large deals than in previous quarters.
HSBC Global Research in a report said, “TCS, Wipro and Infosys outlook commentaries were broadly similar and pessimistic. This is an unusual scenario where deal wins have been quite strong while growth outlook is weak.”
Accompanied with this weak growth outlook is the falling number of their clients, both big and small. Bengaluru-based Infosys disclosed that its number of $100-million and above clients fell by two to 38 sequentially.
Salil Parekh in an analyst call said the company has seen that the discretionary work and some transformation work in some places has either slowed or stopped based on different industries.
Analysts say that the fall in the number of client doesn’t mean that the total business from the client has been wiped out but rather it could’ve gone to the lower bracket, moving from the $100-million category to the $50-million client list.
Wipro also saw a decline in its client number. Sequentially, its number of clients who used to give business worth $75 million, $50 million and $10 million or above fell by one, two and three, respectively. Even its total number of active clients fell by 35 sequentially to 1,444 in the June quarter of FY24. HCLTech saw the number of $20-million and above client fall to 127 in the June quarter from 131 in the preceding quarter.
Tech Mahindra which said that the June quarter was one of its toughest quarter, saw its net new deals total contract value (TCV) at $359 million, down from the March quarter’s $592 million. The number of active clients for the firm also decreased to 1,255 in June quarter from 1,297 in the preceding quarter. Its number of clients who gave business worth $1-million or above fell by two sequentially and the number of those who gave business of $20 million or above fell by three.
For LTIMindtree, its total number of active clients came down to 723 in the June quarter from 728 in March quarter. Bellwether TCS remained unscathed but its number of clients with $100-million business is stagnant at 60 since last two quarters, reflecting the challenge to add clients.