Cognizant, Infy Tap Trend in IT Deals to Beat Tough Times

Tech leaders move towards so-called vendor consolidation deals, which may benefit them

- Jas Bardia

Top companies globally are cutting down on the number of information technology (IT) outsourcers they are working with and consolidating work across silos to a few vendors in an effort to cut costs amid uncertainty over the US administration's flip-flops on trade tariffs.

Infosys Ltd and Cognizant Technology Solutions Corp., two of India's biggest IT services companies, said during calls with analysts that the move towards so-called "vendor consolidation deals" is poised to benefit them.

Jayesh Sanghrajka, CFO of Bengaluru-based Infosys, and Sandeep Mahindroo, the company's financial controller, told analysts at Kotak Institutional Equities that such deals have become important for the company.

"The IT industry currently does not have a healthy flow of net new deals. Infosys has plenty of vendor consolidation deals in the pipeline, a key area of focus," said Kotak analysts Kawaljeet Saluja, Sathishkumar S., and Vamshi Krishna, in a note dated 6 June.

A day earlier, larger peer Cognizant had echoed a similar perspective in a conversation between Surya Gummadi, president of Cognizant Americas, and Bank of America analyst Jason Kupferberg during the bank's annual global technology conference.