TCS wins mega outsourcing contract from Nielsen

IT bellwether Tata Consultancy Services Ltd (TCS) has won an astounding $2.25 billion outsourcing contract, the largest ever bagged by an Indian IT firm.

The deal renews TCS’s engagement with Nielsen, a television ratings measurement company, which in 2007 had awarded a 10-year, $1.2 billion  contract  to the company.

With this deal, TCS is expected to get a business of $320 million from Nielsen every year from 2017 to 2020; $186 million in annual revenue from 2021 till 2024; and $139.5 million in 2025.

TCS-Nielsen outsourcing deal is momentous since large outsourcing deals are on a decline, as companies ranging from banks to retailers are cutting their budgets to maintain back-end technology and utilising the savings to improve their business operations.

TCS reported robust volume growth in Q2 after a disappointing financial performance in Q1. Large deal wins this quarter; mega deals in the pipeline, and bottoming out of the retail sector augurs well for the company. The company has also been using the Internet of Things and Artificial Intelligence technologies to optimize its clients’ systems.

The renewal of the deal will also give new impetus to Rajesh Gopinathan, who took over as CEO of TCS in February. The deal gives the new CEO some breathing room to concentrate on other mega deals in the pipeline.

At 12:15 hours, TCS was trading at a share price of Rs 2652.00 per share, up Rs 56.50, or 2.17  per cent  on the NSE.