Major Indian IT firms like TCS and Infosys secured billions in new contracts during the June quarter. However, revenue growth is slowing as clients adopt phased project implementations and outcome-linked pricing models. This trend is extending the time required to convert signed deals into actual financial gains for service providers.
Detailed Coverage
India’s top-tier information technology companies are reporting significant new business wins even as they navigate a more demanding corporate environment. Tata Consultancy Services led the sector with $9.5 billion in total contract value during the first quarter of the current fiscal year. Infosys also maintained strong momentum, announcing $3.6 billion in large deal wins, with 61% of this value attributed to new business.
Order Book Trends Across the Sector
Other major players also showcased healthy pipeline activity. Wipro reported total bookings of $3.37 billion, and despite a sequential decline in overall constant currency terms, its large deal wins rose 12.9% quarter-over-quarter to $1.63 billion. HCLTech recorded $2.41 billion in new deal wins, while LTIMindtree brought in $1.68 billion. Tech Mahindra, under its current strategy, added $1.08 billion in new orders, reflecting a focus on securing large-scale engagements to support long-term growth.
The Shift in Revenue Recognition
While the order books appear robust, the timeline for converting these bookings into revenue has become more complex. Clients are moving away from traditional time-and-materials contracts toward outcome-based and value-linked pricing. This means that firms are paid based on specific results rather than just the time spent on a project. Additionally, many clients are opting for phased implementations of large programs to better manage their own spending. This change is causing a lag between the signing of a contract and the start of significant revenue flow, which can impact the short-term financial performance of IT companies.
Margin Pressures and Competitive Pricing
This shift in client behavior is also placing pressure on profit margins. As companies adapt their commercial strategies to fit these new pricing models, they are often absorbing costs related to automation and AI integration. The industry is seeing intense scrutiny from clients, who now require clear evidence of business value and productivity gains before committing to full-scale digital transformations. Consequently, contract renewals have become more competitive, with clients frequently negotiating for better pricing and deeper automation benefits. While the integration of artificial intelligence is helping these firms secure 'mega deals' by optimizing operations, the immediate financial realization remains subject to the pace of client-led project rollouts. Investors may continue to monitor how effectively these companies manage the balance between securing long-term contract volumes and maintaining stable profit margins during this transition period.