An increase in digital transformation deals in FY25 signals a return to growth according to IT businesses---

In the previous seven to eight months of FY25, the top four Indian IT firms—Tata Consultancy Services (TCS), Infosys, HCLTech, and Wipro—signed eighteen digital transformation agreements.

By the end of fiscal year 2025, Indian IT services providers should expect an annual increase in income from digital transformation deals of at least 10%. This reflects an improving demand environment for the IT sector, as customers start to reassess their tech spending after being cautious for over two years.

In FY25, cost optimization deals dominated the total deal mix of prominent IT service providers; however, transformation deals are slowly gaining traction. According to statistics from market intelligence firm Unearthinsight, only the top four Indian IT companies—Tata Consultancy Services (TCS), Infosys, HCLTech, and Wipro—signed 18 digital transformation deals in the last 7-8 months of FY25.

According to unearthinsight statistics, vendor consolidation and cost optimization deals generated for over half of total revenue for computer services companies in FY24. Larger digital transformation engagements, which involve updating outdated tech stacks and backend processes, accounted for approximately 25% of revenue, with the remaining 25% coming from other transactions.

In return, revenue from digital transformation deals is predicted to increase from 25% in FY24 to 35% in FY25, while revenue from cost optimization transactions is predicted to decline to 40% in FY25. This demonstrates that there is a growing need for clients in the IT sector and that disposable income is rising. This change will be made following a decline in demand of about two years.

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