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IT outsourcing market: TCS tops chart with 30 deals in Q4 – The Hindu BusinessLine

The global IT outsourcing industry managed to clinch deals to close a year dampened by the Covid-19 pandemic, with Tata Consultancy Services (TCS) leading the pack in the number of deals signed.

Although the overall transaction activity (number of deals signed) decreased slightly to 422 deals in the December 2020 quarter, from 438 in Q3 2020, the total reported annual contract value of transactions increased to $2.8 billion in Q4 from $2.5 billion in Q3, says a report by research firm Everest Group.

TCS led with 30 deals in Q4, followed by HCL Technologies (15); Accenture (12), Infosys (9), Wipro (8), Capital (7) and Atos (5). As companies try to rationalise and consolidate their IT portfolios, the market is witnessing an increase in the number of mega deals. This, in turn, is causing an increase in the overall Total Contract Value for deals — greater than $50 million — says Everest Group Market Vista: Q12021 report.

Service providers reported improved financials as the impact of Covid-19 continued to diminish. A majority of the providers reported a sequential rise in their revenue as well as improved margins.

Digital services continued to dominate transaction activity and experienced a slight increase in Q4, rising to 56 per cent of all outsourcing transactions from 54 per cent in Q3. Cloud remained the most prevalent digital component of outsourcing deals (53 per cent), with advanced automation (19 per cent), including artificial intelligence, machine learning and cognitive technologies, edging out Robotic Process Automation and analytics, by 13 per cent and 12 per cent respectively.

Activity in M&A space

The report highlights the key trends and developments in the global offshoring and outsourcing market. It captures key developments across outsourcing transaction trends, health of Global Business Services (GBS) centres, location risks and opportunities, and service provider developments.

Mergers and acquisitions and alliances activity witnessed a significant rise in Q4 2020. Among M&As, cloud, advanced automation and analytics led the list of key digital focus areas, in that order. Since analytics has become relatively mature, companies are now focusing more on advanced automation than analytics.

North America continued to dominate GBS activity in onshore locations and accounted for 46 per cent of the total new centre set-ups, followed by Western Europe, accounting for 42 per cent of total new set-ups, the report said.

This content was originally published here.

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