Infosys, Wipro’s blockbuster, gives Indian IT companies a big boost

Winning a $ 3.2 billion deal for Infosys and a nearly $ 1 billion contract for Wipro at the end of 2020 show that domestic IT services companies have weathered the pandemic far better than any other industry.

Analysts following the IT industry say such successful successes for most of the calendar year clearly indicate that global multinationals have bet on Indian IT companies to lead their digital journey. “These wins, for some of them the greatest ever, really underscore Infosys and Wipro’s success in their big business strategy and also help customers navigate every aspect of their digital journey. This agreement also reinforces the fact that companies are aggressively using digital transformation as a tool to reduce costs and increase productivity, “Prabhudas Lilladhar analysts Aniket Pande and Aditi Patil said in a note to investors.

On Monday, Wipro in a filing with the exchanges said it had signed a mega-deal with Metro AG that includes a minimum commitment of $ 700 million over a five-year period and a minimum of $ 1 billion in case the deal be extended by another four years for a total duration of nine years. The transaction, however, requires antitrust approval from the German Federal Cartel Office (FCO) and the Anti-Monopoly Committee of Ukraine. The deal will also require a nod from the head of the German Federal Ministry of Economy and Energy. The transaction is expected to close by 30 April 2021.

The next day, Infosys announced a major deal, considered the largest ever, when it claimed it won a contract from Daimler to transform its IT operating model and infrastructure landscape into workplace services. The size of the deal, according to analysts, is worth $ 3.2 billion. Analysts point out that the value of new business won for Infosys in the quarter is equal to the net new business of the previous five quarters. Infosys won 16 big deals in the second quarter of FY21.

After the deal won, Infosys shares closed at ₹ 1,252, about 2.6% higher than the previous closing price, while Wipro gained 5.7% to close the day at ₹ 384.95 on the stock exchange. of Bombay.

Surprise aggression

What’s significant about these contracts is that they are mostly personnel acquisition agreements, with Infosys alone having integrated more than 16,000 employees through other partnerships in recent years.

Analysts point out that aggression in deal wins for Wipro continued into the third quarter – usually a weak quarter – with the IT services company winning five deals Olympus, Thoughtspot, Fortum and Verifone in addition to Metro AG. “Wipro has really surprised the street with its aggressiveness, focusing more and more on big business and targeted sales. Under the new CEO, Wipro has got off to a solid start and we believe the growth rate gap will narrow relative to peers, ”analysts said.