TCS bags record $2.25 billion outsourcing contract from Nielsen

The rating firm's outsourcing contract has been extended for five years until 2025. Nielsen has also committed to buying more services offered by TCS for the remaining part of the contract.

Tata Consultancy Services (TCS) Chief Executive Officer Rajesh Gopinathan speaks during a news conference announcing the company's quarterly results in Mumbai, India, July 13, 2017. Picture taken July 13, 2017.REUTERS/Danish Siddiqui

India's largest software exporter, Tata Consultancy Services Ltd (TCS), has bagged a Rs 16,250 crore ($2.25 billion) outsourcing contract from Nielsen, the largest ever won by an Indian IT firm.

Back in 2007, TCS for the first time had made a deal with Nielsen for $1.2 billion for 10 years. Later in 2013, the deal was extended by three more years till 2020, Mint reported.

Under this multi-billion dollar contract, TCS is assured of $320 million in business from Nielsen every year, starting 2017 till 2020, $186 million in annual revenue from 2021 till 2024 and $139.5 million in 2025, according to a regulatory filing made by Nielsen.

"The term of the agreement has been extended for an additional five years, so as to expire on December 31, 2025, with three one-year renewal options granted to Nielsen," Nielsen said in the statement.

Nielsen has also committed to buying more services offered by TCS for the remaining part of the contract, the business daily reported. This deal can be considered CEO Rajesh Gopinathan's stellar performance after taking the position in February after his predecessor N Chandrasekaran was appointed the chairman of Tata Sons.

"In connection with the entry into the agreement, the parties have agreed to terminate the separate Global Infrastructure Services Agreement between them as of the Effective Date and include the services provided the rounder in one or more Statements of Work ('SOWs') arising under the Agreement. TCS will globally provide Nielsen with professional services relating to information technology (including application development and maintenance), business process outsourcing, client service knowledge process outsourcing, management sciences, analytics, and financial planning," the statement stated.

A market analyst has lauded the deal agreement and said: "From a business perspective it is a good deal." "If we assume the earlier deal came with an average $250 million ACV (annual contract value), although revenue recognition varies with every year, TCS getting $320 million in ACV in the first few years means a gain by $70 million or say at least a 40 basis points positive impact on growth," Mint quoted a Mumbai-based market analyst.

The IT outsourcing firm reported had 6.2 percent dollar revenue growth in the year to March 2017. TCS shares have also given a return of 11.2 percent since the start of 2017.