Deal cycles in India’s IT services sector are becoming shorter, even for large contracts – a trend analysts expect to continue in the coming quarters. This shift reflects rapid technological advancements and evolving client priorities, pushing companies to prioritise flexibility and agility over long-term commitments.
HCLTech CEO and managing director C Vijayakumar noted during a post-earnings press conference: “We’re seeing the average duration of signed deals getting shorter, which naturally leads to a moderated total contract value (TCV). However, the more important metric here is annual contract value (ACV), which remains strong”.
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HCLTech reported a slight sequential decline in deal wins, with its TCV at $2.1 billion for the December quarter compared to $2.2 billion in the previous quarter.
Similarly, Wipro’s CFO Aparna Iyer observed a decline in large deals but highlighted increased momentum in small and medium-sized contracts. “This is just one quarter, so we will need two or three more quarters to determine the trend,” she said. Wipro secured $1 billion in large deals during the quarter, with total deal wins amounting to $3.51 billion.
Clients are increasingly favouring shorter-term contracts to adapt to rapidly changing tech landscapes. Pareekh Jain, CEO of Pareekh Consulting, explained: “Deals are shifting from cost takeout projects to business transformation and generative AI initiatives. Clients want faster, more flexible solutions, which is why deal durations are reducing.”
Debashis Chatterjee, CEO of LTIMindtree, echoed this sentiment: “Deal cycles are definitely shorter than they were a year ago because clients are closing deals faster.”
Analysts suggest that while shorter deal tenures may reduce TCV in some cases, the overall increase in deal volumes and quicker decision-making could prove beneficial for the industry.
Tata Consultancy Services (TCS) observed a reduction in deal cycles by a few weeks, signaling faster client decision-making. K Krithivasan, CEO and managing director of TCS, said: “We reviewed deals exceeding $20 million and found a reduction in deal cycles, indicating improved client decision-making”. TCS’s TCV grew 18.6% sequentially to $10.2 billion, encompassing both new and existing contracts.
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While Infosys did not report significant changes in deal cycles,
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