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BL Research Bureau

TCS can look forward to several positives from the five-year multi-million dollar deal with ArvinMeritor, to be its global engineering partner. ArvinMeritor supplies components to commercial trucks, trailers and original equipment manufacturers.

Being a multi-year deal, it gives long-term revenue visibility.

The deal being in the product engineering services space, the realisations may be better compared with traditional application development and maintenance services.

A chunk of the services are expected to be delivered offshore from Pune, which creates a low cost-structure for the company. This deal specifically will support ArvinMeritor’s product-line in the Asia-Pacific markets.

This is a fast growing geography compared with the developed markets and this is a positive for TCS.

Engineering and industrial services contribute only 5.3 per cent of TCS’ revenues currently. In this backdrop, the multi-million dollar deal, involving product engineering services, may help enhance the contribution from manufacturing and automotive clientele, to overall revenues, even as new pressure points emerge in the BFSI (banking, financial services and insurance) vertical.

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