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IT mega deals of over $100 million hit a historic low in September quarter

The growth in the IT sector was driven by smaller deal wins which saw the biggest jump on YTD basis, while mega deals continue to remain flat. Industry experts expect this trend to continue in the December quarter as well.

December 21, 2022 / 12:11 IST
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The value of $100-million-plus mega deals in annual contract value (ACV), which historically made up more than 20% of the total managed services ACV for IT and business services sector, declined to 10% in the July-September quarter (Q3) of calendar year 2022, impacting Indian and global IT companies, according to technology research firm ISG.

As per a note from ISG, there were three mega awards with a total ACV of $705 million in Q3CY22. This is the lowest number of mega awards in the sector since 2017. Rather, the most significant year-to-date growth in the sector has been driven by an increase in the number of smaller transactions ranging from $5 to $19 million in ACV. Meanwhile, mega deals continue to remain flat.

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This comes at a time when the Indian IT sector has started to experience a slowdown in growth due to macroeconomic uncertainty, inflation, and a looming recession in the US, all of which are influencing client spending in the sector.

However, from January to September, there were 18 mega deals reported, with an ACV totalling $2.7 billion. This contrasts with 13 awards totalling $2.5 billion in ACV during the same period last year.