Nearshore Americas

Big-Dollar Tech Projects are Vanishing in India

Indian tech providers are having a rough time scoring big time projects, being forced to settle for smaller, less profitable ones.

It is common for tech projects in Bangalore —a business hub regarded by many as India’s “Silicon Valley”— to reach hundreds of millions of dollars. A US$100 million project is considered significant in the Bangalore IT ecosystem, while US$500 million projects are classified as mega deals.

Those numbers are far from the average project size today, however. Most tech projects in India now stand somewhere near the US$25 million mark, according to an analysis by The Economimc Times.

Many reasons have been given to explain project shrinkage, but most analysts point to a mix of technological disruption from GenAI, cost efficiencies and macroeconomic pressures.

No tech firm subsists from large deals only. Most companies also need a healthy stream of smaller projects to keep the engine chugging along. However, a lack of large, expensive projects reflects badly on a company’s portfolio.

The declining trend in deal size has caused several tech firms in India and elsewhere to be more conservative in their revenue forecasts, worrying investors and impacting their stock performance.

Some tech executives have tried to make away completely with small deals, focusing mostly on larger ones. Results have been mixed, though.

Former Wipro CEO Thierry Delaporte, for example, aggressively pursued larger deals until his recent resignation. In late 2023, Delaporte announced during an investor meeting that the company intends to “exit smaller, unprofitable deals.” He recruited Accenture executive Stephanie Trautman as Chief Growth Officer. Trautman also left the company after nearly three years of struggling to secure large deals.

Following Trautman’s resignation, Wipro disbanded the large deal team, reassigning nearly seven executives to different positions. As a result, several senior executives have permanently left the company.

In 2021, in the immediate aftermath of the COVID-19 pandemic, Wipro secured 22 large deals, including one exceeding US$1 billion. According to Delaporte, most of these were significant cloud transformation contracts.

 

No more big meals

There was a time, before 2024, when large tech projects weren’t a rarity in the Indian tech ecosystem. In the second quarter of 2023, for example, Infosys secured US$7.7 billion in large contracts, with nearly 50% of these coming from new clients.

Large tech projects involve substantial financial commitments and span many years, making it easier for IT firms to allocate resources effectively. They also strengthen client partnerships, increasing the likelihood of repeat business, according to Manjunath Hegde, sales head for an IT company in Bangalore.

Hegde also emphasized that, without large deals, the tech industry would face significant challenges, potentially leading to reduced revenue forecasts and declining stock prices.

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The shift towards shorter deals has further complicated the pursuit of large contracts. Five years ago, most large deals for Indian IT companies had durations of 10 to 12 years. Project timelines have now been cut to five or even three years.

Additionally, clients are increasingly demanding that service providers share the risks and ensure their services contribute to operational cost savings.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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