Clients delay big deals in IT Sector

Owing to the prevalent global economic uncertainty – slower global economic growth caused by the US-China trade war and a delayed Brexit – IT services providers are delaying decisions on large deals. For example, recently, DXC Technology, with about US$ 20.75 billion in revenue, slashed its revenue target by US$ 275 million to US$ 19.5-US$ 19.8 billion. It delayed deals worth US$ 1 billion in Q1, 30% of which were closed in Q2. This is impacting Indian IT players. TCS has cited delays in deal closing as one of the reasons for slower growth in Q2.

“Overall, clients are skeptical about whether to invest in technology for growth or leveraging it for cost reduction and hence the uncertainty for large-sized deals. (We have) also come across some deals where clients have put the contract process on hold, though not explicitly stating the reason,” stated Mrinal Rai, principal analyst at ISG.