TCS’ record $2.25 billion deal with Nielsen tops up earlier $2.5 billion contract by 5 more years

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New Delhi | Updated: December 22, 2017 12:52:59 PM

TCS has renewed its multi-year outsourcing deal with Nielsen for $2.25 billion, overriding the remaining four-year period of the existing $2.5 billion deal running up to 2020, and also extending the same by another five years to 2025.

Shares of TCS, BSE, NSE, Tata group company, india largest software exporter, Ind AS accounting norms, tcs net profitThis deal has renewed the association between India’s largest IT company TCS and Nielsen. (Image: Reuters)

India’s largest information technology services company TCS has renewed its multi-year outsourcing deal with Nielsen for a whopping $2.25 billion. The renewed contract overrides the remaining four-year period of the existing $2.5 billion deal running up to 2020, and also extends the same by another five years to 2025. Way Back in 2007, Nielsen awarded a 10-year contract of $1.2 billion to Tata Consultancy Services. Later, in 2013, the deal size was more than doubled to $2.5 billion with an extension of three more years until 2020.

Now, under the new $2.25 billion contract, Tata Consultancy Services has been assured a business of $320 million from Nielsen every year, from 2017 to 2020. “The term of the Agreement has been extended for an additional five years, so as to expire on December 31, 2025, with three one-year renewal options granted to Nielsen,” Nielsen said in a filing to the US Securities and Exchange Commission.

“In connection with the entry into the Agreement (the new deal), the parties have agreed to terminate the separate Global Infrastructure Services Agreement between them as of the Effective Date and include the services provided thereunder in one or more Statements of Work (‘SOWs’) arising under the Agreement,” Nielsen said in the filing.

This comes days after Tata Group’s TCS has once again retained its first position in wealth generation in the last five years, leaving behind HDFC Bank and Mukesh Ambani’s RIL. According to the leading brokerage firm Motilal Oswal’s 22nd Annual Wealth Creation Study, TCS retained its first rank for creating investor wealth worth nearly Rs 2.50 lakh crore between 2012 and 2017, while HDFC Bank generated Rs 2.31 lakh crore and RIL generated Rs 1.89 lakh crore in the same period.

Earlier in October 2017, Tata Consultancy Services (TCS), after posting disappointing financial results in Q1, reported a rise of 8.4% in the net profit at Rs 6,446 crore QoQ in line with the street expectations. TCS’ July-September revenue in rupee terms at Rs 30,641 crore was again in line with the street expectations of 30,423 crore. TCS made a surprising comeback on the EBIT margin front by reporting 25.1% or the quarter that ended September 30, much higher than what was expected. It rose sharply from 23.4% in the previous quarter to 25.1%, inching towards last years 26%. “This has been a very satisfying quarter,” Rajesh Gopinathan, CEO & MD said.

“We experienced robust volume growth in Q2, driven by good demand across multiple industry verticals. Strong, broad-based client metrics this quarter demonstrates our increasing success with newer customers. Large deal wins this quarter, a good pipeline, and bottoming out of the retail sector softness positions us well,” Rajesh Gopinathan added. “We have been using the Internet of Things and Artificial Intelligence technologies to optimize our clients’ systems,” Rajesh Gopinath said further.

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