TCS clinches billion-dollar deal

Did TCS get your attention when they announced this deal?

The market penetration, in specific areas, achieved by a number of Indian-based firms has been well documented--see, for example, the TPI Index report at TPI Index. But, this is still the first time an Indian firm has announced a mega deal--a deal with a TCV (total contract value) of US$1 billion and above.

What I found intriguing was the acknowledgement in a lot of the press of ACV (annualized contract value) as well as TCV--a topic I wrote about on this blog some time back when TPI first started guiding the industry towards thinking about more than TCV. It shows the sophistication that continues to grow in the sourcing industry.

But, what does the deal mean? Does it matter that TCS has signed a mega-deal? On the one hand, we've averaged less than 25 such deals per year since 2003 so this is a pretty select group of deals. And that certainly gives TCS some nice "bragging rights". Perhaps more importantly, it positions an entire group of firms in the minds of CEOs as significant players in this industry--much like HP achieved years ago with their P&G deal.

However, the key in sourcing is not just signing the deal, it's executing well. When firms show consistent high quality execution for such large deals, then they are well positioned to become even bigger players in the sourcing industry. If TCS demonstrates that, they'll be in an even stronger position. And if you're a firm in China, the challenge just got even bigger.

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Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.