TCS bags record $2.25 billion outsourcing contract

TCS bags record $2.25 billion outsourcing contract





India's largest software exporter, Tata Consultancy Services Ltd (TCS), has bagged a Rs 16,250 crore ($ 2.25 billion) outsourcing contract from Nielsen, the largest ever won by an Indian IT firm.

Back in 2007, TCS for the first time had made a deal with Nielsen for $ 1.2 billion for 10 years. Later in 2013, the deal was extended by three more years till 2020, Mint reported.
According to a regulatory filing made by Nielsen, under the multi-billion dollar agreement, TCS is guaranteed $ 320 million in business from Nielsen every year, starting 2017 till 2020, $ 186 million in annual revenue from 2021 to 2024 and $ 139.5 million in 2025.

"The term of the agreement has been extended for an additional five years, so as to expire on December 31, 2025, with three one-year renewal options granted to Nielsen," Nielsen said in the statement.

Nielsen has also been able to buy more services offered by TCS for the remaining part of the contract, the business daily reported. This deal can be considered CEO Rajesh Gopinathan's stellar performance after taking the position in February after his predecessor N Chandrasekaran appointed the Chairman of Tata Sons.

"In connection with the entry into the agreement, the parties have agreed to terminate the separate Global Infrastructure Services Agreement between them as the Effective Date and include the services provided in the rounder in one or more Statements of Work ('SOWs') TCS will globally provide Nielsen with professional services related to information technology (including application development and maintenance), business process outsourcing, client service knowledge processing outsourcing, management sciences, analytics, and financial planning, "the statement said.

A market analyst has lauded the deal agreement and said: "From a business perspective it is a good deal." "If we get the first deal in an average $ 250 million ACV (annual contract value), although the revenue recognition varies with every year, TCS getting $ 320 million in ACV in the first few years means again by $ 70 million or at least a 40 basis points positive impact on growth, "Mint quoted a Mumbai-based market analyst.


The IT Outsourcing firm reported that 6.2 percent dollar revenue growth in the year to March 2017. TCS shares have also given a return of 11.2 percent since the start of 2017.