Mega deals may halve at IT majors on client business rejig

The contribution of mega deals as part of total new revenue of India’s leading information technology firms could further slide in FY26 as clients’ focus undergoes a structural change. Budget with ET Budget 2025: A CFO’s playbook for operational excellence and long-term growth Rising Bharat may need to take center stage for India’s game-changing plans Will Indian Railways accelerate to global standards with govt’s budgetary allocation? Even as they remain critical for robust growth, the percentage of mega deals—those with total contract value ( TCV ) of $500 million or more—will stabilise at around 50% for top IT services players in FY26, industry experts said. Mega deals accounted for 55-65% revenues of the country’s top five IT services companies until FY24, data sourced by ET show.

These firms, however, will still be dependent on large deals—worth $100 million and above—at 55-65% of net new revenues in FY25 and FY26, experts said. “In the short term, smaller deals are becoming the ‘new norm’, providing flexibility and lower risks for clients,” said Gaurav Vasu, founder and CEO of UnearthInsight, a platform that offers business and financial intelligence on Indian startups. “The percentage of mega deals will stabilise at 50% for top IT services players in FY26.



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e Lets Crack the Billionaire Code By - CA Rahul Gupta, CA with 10+ years of experience and Accounting Educator View Program Data Science SQL Server Bootcamp 2024: Transform from Beginner to Pro By - Metla Sudha Sekhar, IT Specialist and Developer View Program For top tier software service providers, large client deals accounted for over 70-80% until FY24. Smaller deals were generally 15-20% of the TCV or net new revenues, it added. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories ETtech Also Read: Why deal sizes are shrinking for top Indian IT companies Analysts said the rising share of smaller deals signals a structural shift in the IT services market , given the moderate growth projections.

“The reliance on smaller deals underscores a structural shift in the IT services market,” said Saurabh Gupta , president – research and advisory at US-based HFS Research. “Enterprises are preferring modular, outcome-driven engagements over monolithic mega-deals, which may not provide the agility businesses now demand.” In the third quarter ending December 2024, most IT firms reported healthy deal wins with smaller sized deals dominating.

TCS , for example, won deals worth a total contract value of $10.2 billion in the December quarter, but it had no mega deal wins. “There are no mega deals because the deal tenure with what you won could be marginally lower than what it was before,” said K Krithivasan, chief executive and managing director of TCS.

“We achieved significant large deal wins across various markets and industries, resulting in a double-digit growth in TCV year-on-year. This performance is particularly noteworthy given the absence of any mega deal wins. Our strong deal pipeline and TCV gives us confidence as we look ahead,” he said.

Krithivasan said the quantum of large deal wins has shown improvement. For most IT majors, the quantum of small and medium-sized deals has picked up this quarter. Also Read: Drop in renewal deals poses revenue challenge for top IT firms Smaller deals generally have TCV of anywhere between $5 million and $50 million.

For larger firms, it could be sub $100 million. HCLTech won new deals worth $2.1 billion TCV in the fiscal third quarter, “with small deals growing stronger than the large deals in an era where large deals are getting broken into smaller chunks,” said C Vijayakumar, CEO and managing director of the country’s third-largest IT player.

“This growth in small deals won is what we would want to see as it is also in line with the client spend patterns,” he said. Also, small deals are getting converted quicker than larger deals, he added. Aparna Iyer, chief financial officer at Wipro , though, said, “We'll wait and watch to see if this is a deterministic trend that plays out.

But as far as the overall texture of deals, when we see in the pipeline, I think there are quite a few large deals as well, both in terms of cost takeout, vendor consolidation, efficiency led.” As per UnearthInsight’s data, the percentage of small deals have increased in the last 4-5 quarters to over 25-30% of net new revenues. In the short term, smaller deals are becoming the norm, providing flexibility and lower risks for clients, Vasu said.

Gupta of HFS Research explained that while mega deals will not disappear entirely, their role is evolving towards platform transformation and cloud modernisation. “Indian IT needs to align with this trend by developing a broader portfolio of digital and AI-led services to cater to a fragmented deal landscape,” he added. Also Read: Indian IT sees deal tenures shrinking in rich neighbourhoods.