IT deal pipeline remains strong, but revenue conversion crawls

Bengaluru: The deal pipeline of major Indian IT services companies remains strong, though the conversion ratio continues to crawl, leading to slow additions to revenues.

According to industry experts, apart from slow project ramp-ups in large projects, the increasing adoption of outcome-based projects is putting pressure on operating margins.

“First quarter (FY27) continued to see sound deal pipeline with low conversion to revenues. The top line growth of large firms remained subdued and that of mid-tier IT firms was below the average growth rate of previous years. This situation is unlikely to change in the coming quarters,” said a Mumbai-based market analyst.

During the first quarter of the current financial year, TCS’ deal pipeline was at $9.5 billion. In the previous quarter, the Tata Group company’s TCV (total contract value) stood at $12 billion.

Similarly, Infosys’ large deal TCV was at $3.6 billion in the June quarter of the ongoing fiscal year, as compared to $3.2 billion recorded in the previous quarter.

Deal pipeline of Wipro remained strong, with total bookings of $3.37 billion during the June quarter of FY27. Similarly, HCLTech reported robust net new deal wins worth $2.4 billion during the same period.

According to industry experts, vendor consolidation is one of the reasons some companies are winning large deals. They also said that deal wins are not uniform in nature across companies.

“The Q1FY27 results of Indian IT firms were typically marked by growth moving sideways, continuation of mega deals, which we believe, are primarily driven by vendor consolidation, and soft growth outlook, but not ‘falling off the cliff’,” Jimit Arora, CEO of Everest Group, told

“Booking momentum is coexisting with plateaued growth – confirming share shifts in accounts,” he added.

Sources in the know said that the pricing environment is becoming competitive, putting pressure on legacy projects. “IT firms are increasingly facing margin pressure as competitive intensity in terms of pricing has become very high. In addition, AI-led deflation is putting margin pressure. This is unlikely to change in the near term as deals based on outcome-based pricing remain a small fraction of total projects,” said an industry source. However, a sound deal pipeline of both large and mid-tier IT companies is a positive indicator of future growth prospects. When demand recovers, it could help accelerate growth.