India's top IT services provider Tata Consultancy Services said on Wednesday that it has signed a new contract worth 840 million pounds ($1.1 billion) with British pension scheme Nest for an initial tenure of 10 years.

The contract, to help Nest transform its administration services, if extended to the entirety of its 18-year tenure would be worth 1.5 billion pounds, TCS said in a statement.

The deal comes at a time when Indian IT services companies are facing demand challenges in their key markets, the United States and Europe, where clients have cut spends amid worries about recession.

TCS and Nest have been working together since 2011.

Last week, TCS mutually terminated a $2 billion contract with insurance provider Transamerica, citing reasons that include a challenging macro environment.

Investors now await an updated view from India's IT companies which are due to report their quarterly results next month after they flagged uncertain demand environment in April.

In response to the slowdown, the companies are slashing hiring and getting projects done with existing workers, a rare pullback that could weigh on the country's economy.

TCS shares are up 2.1 per cent so far this year, underperforming nearly 4 per cent gains in broader Nifty 50 index.

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