While the India IT services sector’s fiscal first quarter profits showed a wide rebound across all verticals and locations, suggesting stronger fiscal growth than the previous year, the industry continued to enjoy robust deal signings in August. “After recovering in the previous months, the 3M rolling sum of deal signings—a strong lead indicator of deal TCVs—remained strong in August.” The two companies with the most contract wins in August were Accenture and Hewlett Packard Enterprise (HPE), with three each. The two biggest deals of the month were HCL Tech’s with Xerox and Tech Mahindra’s with Marshall Group.
After performing worse than tier-II IT companies for five quarters, tier-I IT stocks saw a significant upturn in Q1. According to the research, a 14% valuation premium over tier-I (up from parity last quarter) indicates that management comments are optimistic for the remainder of FY25, notwithstanding certain tier-II companies’ poor performance in Q1. However, given the dismal Q1 margins and impending wage revisions, tier-II earnings growth may be under pressure.
In August 2024, the IT sector’s top vertical deal-winners were CPG & Retail and Technology. Following a lull for several months, deal announcements in the technology industry were frequent and substantial.
Europe led the world in deal-win announcements with eight, followed by North America with six and the Rest of the World with three. The majority of declared transaction wins had to do with modernizing technology and undergoing digital transformation. According to the survey, Accenture and HPE closed the most transactions in August with three each.
In GenAI, the IT industry has documented several agreements and partnerships. To accelerate the adoption of GenAI and drive digital transformation for Mahindra Group companies, Tech Mahindra and Google Cloud teamed. Accenture and S&P Global collaborated independently to help clients and staff fully utilize GenAI.
Regarding mergers and acquisitions (M&A), BNP Paribas stated that the two biggest deals of the month were Accenture’s purchase of Boslan, a company that provides management services for major infrastructure projects, and Consus.health, a company that offers services for medical planning and patient management.
Last month, Accenture made two acquisitions, while HPE and Capgemini each made one. Regarding management changes, Accenture appointed a Group CEO of Accenture Operations and Global Communications, Media & Technology industry practices chair, while HCL Tech and Mphasis named new CFOs. One of the most significant top level departures of the month was Wipro’s CTO.
