“IT Companies Add Customers for Small Transactions”

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Leading mid-tier IT companies including LTI, Mindtree, Cyient, and Persistent Systems continue to experience steady growth in new customer additions for small and mid-size transaction revenue categories, while in larger revenue brackets , new net customers remained stable in the second quarter ended in September. .

Industry analysts attribute this to the tendency to split a mega transformation project into different levels and attribute them as small transactions to more than one company.

Together, the four companies saw 303 new net customers in the revenue category over $ 1 million, 175 over $ 5 million and 83 over $ 10 million in the second quarter of fiscal 22, against 284, 152 and 63, respectively in the same quarter of last year. .

Piyush Pandey, Senior Analyst – Institutional Equities, told YES Securities Activity area, “Today, customers prefer to go with a number of mid-size IT companies rather than assign the entire transformation project to a single large company. They divide a big transformation into four or five smaller phases and deliver it to a larger number of businesses. This provides flexibility to corporate clients and they can award contracts by phase and judge the outcome accordingly. “

“By proceeding step by step”

“Transformation mega-agreements are everything from moving to the cloud to providing business insights based on the data collected. But for small business customers new to the cloud, they tend to take it step by step according to their budgets. They will move to the cloud first, and then based on the data they are able to process, they will decide what is needed for the next phase, ”said Amit Chandra, Assistant Vice President, HDFC Securities. Activity area.

He added: “The manufacturing and high-tech verticals saw a sharp increase in transactions, which were previously dominated by the BFSI and retail sectors. Engineering and R&D departments also reported very good deals and looks promising as a category.

TCV counts

Although in smaller income brackets, over the past two years many mid-tier IT companies have seen the total value of quarterly contracts almost double and momentum is expected to continue with existing customers moving up the ladder. the size of transactions and new businesses adopting cloud infrastructures.

Chandra said, “If you see the TCV numbers, there has been a significant increase in trade size over the past four quarters. On a rolling twelve month basis (TTM), the overall mid-level IT TCV increased by 30-35%.

Mindtree reported $ 360 million ($ 303 million) from TCV to T2FY22. The TCV was much higher in the first quarter at $ 504 million, the first time Mindtree broke the half billion mark.

For peers like Mphasis, TCV has more than doubled from pre-pandemic figures. From $ 201 million in the pandemic quarter of T4FY20, the value of the company’s contracts has grown steadily to reach $ 360 million in T2FY21 and $ 505 million in the last quarter. At T2FY22, the TCV was $ 241 million.

Cyient also saw 22.5% year-over-year growth in TCV or order intake. It was $ 156 million in fiscal year 22. Persistent System reported a TCV of $ 282.5 million for T2FY22.


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