TCS Lands $1 Billion Telefónica UK Deal After Mega-Contract Drought: Report
Deal, if confirmed, would add to CEO K. Krithivasan’s run of billion-dollar contracts
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Tata Consultancy Services Ltd (TCS), India’s largest IT services exporter, has secured a 10-year contract worth about $1 billion with Telefónica UK, Mint reported, citing people aware of the developments.
The contract, if confirmed, is a rare mega-deal win for the company after a nearly two-year lull in large contract signings.
Under the terms of the agreement, TCS will provide application management and infrastructure services to Telefónica UK, and is expected to generate more than $100 million in annual revenue, the Mint report said, citing executives familiar with the deal.
Neither company has made a formal announcement.
The contract is expected to lift TCS’s annual revenue by roughly 0.3%, assuming the rest of its business remains stable. While financially modest in percentage terms, the deal restores visibility to TCS’s large-deal pipeline at a time when peers have outpaced it in headline contract wins.
The Telefónica UK engagement is the fourth billion-dollar deal secured under Managing Director and Chief Executive K. Krithivasan, who took charge in June 2023.
Previous wins during his tenure include a $1.1 billion deal with the UK’s National Employment Savings Trust, a $1 billion digital transformation contract with Jaguar Land Rover, and a $2.5 billion, 15-year administration contract with Aviva.
The latest agreement further underscores the importance of the UK market, which accounted for about 17% of TCS’s $30.18 billion revenue in the most recent fiscal year. All four billion-dollar contracts signed under Krithivasan have involved UK-based clients.
Analysts expect the Telefónica UK deal to deliver lower-than-average margins, broadly in line with TCS’s ₹15,000-crore BSNL 4G network contract, and below the company’s 24.2% operating margin. Even so, analysts said the engagement provides scale, long-term revenue certainty, and strategic continuity.
The groundwork for the contract was laid under Amit Kapur, former head of TCS’s UK and Ireland business, who now leads the company’s AI and services transformation unit, Mint reported.
TCS has lagged its peers on growth, posting 4.1% revenue growth in FY24 and 3.78% in FY25, when compared with larger contract wins across the sector.
Cognizant secured a $1 billion US healthcare IT deal in the December quarter of FY25, Infosys won multi-billion-dollar contracts with Liberty Global and the NHS, and HCLTech signed a $2.1 billion deal with Verizon in the first quarter of FY25.
Brokerages remain cautious on TCS’s near-term outlook. Kotak Institutional Equities has forecast a 2.5% revenue decline in FY26, while Motilal Oswal expects a 0.5% drop, citing recent losses to competitors on contracts including Zurich Life Insurance and Phoenix Group.
