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TCS secures $2.25-billion contract from Nielsen

This fresh $2.25-billion dollar contract comes as a big boost for TCS as it growth has slipped into single digits and sets up a strong base for the coming years.

Tata Consultancy Services (TCS) has bagged a fresh $2.25-billion contract from its existing customer, global TV rating measurement company Nielsen, making it one of the largest ever such deal for the Indian IT industry.

TCS’ relationship with Nielsen began in 2007 with a 10-year, $1.2-billion contract which was further extended to 2020 taking the total value to $2.5 billion. A filing with the SEC said, “Nielsen has committed to purchase services from TCS from the Effective Date through the remaining term of the Agreement (the ‘Minimum Commitment’) in the amount of $2.25 billion, including a commitment to purchase at least $320 million in services per year from 2017 through 2020, $186 million in services per year from 2021 through 2024, and $139.5 million in services in 2025.”

This fresh $2.25-billion dollar contract comes as a big boost for TCS as it growth has slipped into single digits and sets up a strong base for the coming years.

The Nielsen filing also said, “In connection with the entry into the agreement, the parties have agreed to terminate the separate global infrastructure services agreements between them as of the effective date and include the services provided thereunder in or more statements of work arising under the agreement.”

TCS will provide Nielsen with services relating to information technology, business process outsourcing, client service knowledge process outsourcing, client service knowledge process outsourcing, management sciences, analytics and financial planning.

On TCS bagging this contract, Sid Pai, managing partner, Tekinroads, a technology consulting company, said, “It is a great feat and a feather in their cap. It is very unusual and does not happen so very often.”

Pai also noted that considering that Nielsen was an existing customer, TCS has showed its prowess in extending their contract with additional multi-billion dollar deal.

TCS at the end of second quarter of FY18 registered a revenue of $4.73 billion, recording a year-on-year growth of 8.3 per cent. Net income during this period was $1 billion while the operating profit margin stood at 25.1 per cent.

TCS is no stranger to bagging multi-billion dollar deals. In 2008, TCS acquired Citigroup Global Services, the India-based captive business processing outsourcing (BPO) arm of Citi, for a cash consideration of approximately $505 million. In addition to the sale, Citi also signed an agreement for TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates in an aggregate amount of $2.5 billion over a period of nine and a half years.

In 2011, TCS through its UK based subsidiary Diligenta had bagged a 15-year deal with UK-based Friends Life worth $2.2 billion.

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