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TCS says no visible sign of recession yet, but deal sizes shrinking

TCS did not win any billion dollar deals in the June quarter, but had a decrease in new deal wins from $11.3 billion in the previous quarter to $8.2 billion in the past quarter.

Compared to the last deal, this one had fewer wins at $400 million.

“The recession is driving companies to do small and mid-size deals of less than or equal to $10 billion”, says TCS.

The US and European recession is both expected and feared by many. The stock market is devaluing company stocks, the bearish finance approach has been marketed, and commodities are no longer plentiful.

TCS, India’s largest technology company and most affected by the Indian government ban on R-Talk, seems to see no effect from it in the near term. Rajesh Gopinathan, CEO of TCS said that primarily they get their information about the situation from newspapers.

The CEO of the company said that they are seeing serious discussions of recession, but there is no early evidence of it.

Various economic models such as stagflation, slowflation, and the classic slowdown have caused fear to set in before things got worse during the recession.

With fewer deals won by the company, it looks like some are having an effect on the size of these deals.

There seems to be in a downward financial pattern. The company made over $8.2 billion in total deals, but this is $3.1 billion less than their quarterly orderbook last quarter. This could be because big companies are tightening their expenditure or because they’re spending less on research and development.

The $11 billion number from the previous quarter was marked by two big, difficult deals. The company is working to replicate the successes, but it’s unknown whether more difficult deals are on the rise or if that is an anomaly.

According to TCS’s COO, the company made two deals valued at $400 million in the last quarter. The trend will likely continue with a combination of small and medium-sized deals. “It is safe to assume that we will be in the $7-9 billion range”, they said.

TCS showed the fastest retail growth, and healthcare is no longer at the forefront. The BFSI segment remains the most successful.

BFSI13.9%₹5,170 crore
Communications19.6%₹2,370 crore
Retail25.1%₹2,220 crore
Healthcare11.9%₹1,602 crore
Manufacturing16.4%₹1,404 crore
OthersNA₹650 crore
Source: Business Insider.

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