BENGALURU: Though IT companies have been seeing some softness in the BFSI (Banking, financial services and insurance) vertical, they are optimistic as the situation seems to be improving across geographies.
For top IT firms in India, the BFSI sector in the US is the key revenue segment but with the recent banking crisis, growth in the firms has been hit. But top executives in the recent earnings conference said that overall sentiment is improving.
Milind Lakkad, Chief HR officer at TCS, said, different regions play out differently. “In BFSI, we are seeing good traction in Nordics and Benelux. Central Europe is slightly complex and difficult...Each vertical and each region is going to play out differently,” he said.
For TCS, the BFSI TCV (total contract value) was at $3.1 billion. “The banking and financial services industry is the largest spender on technology and that reflects in its outsized share of revenues within TCS’ business mix,” said K Krithivasan, who will take over as TCS CEO and MD from June 1,2023.
TCS’ BFSI sector grew by 11.8% in FY23. Infosys CEO Salil Parekh said in the fourth quarter the company saw changes in the market environment. “As the quarter progressed we saw some clients ramp downs on programs. And this was across different sectors- Telecom, Retail, Hi-Tech and parts of Financial Services- mortgages, investment banking, and asset management. And that was something which was unplanned as we went through,” he said.
The IT company’s financial services sector got hit in Q4 as revenue from the vertical was down 1.7% YoY. Recently, JP Morgan said that IT companies TCS and Infosys have the highest SVB and US regional banking exposure. TCS has the highest global banking exposure at 38%, Wipro (35%) and LTIMindtree (37%).
JP Morgan had said that the collapse of SVB, Signature Bank and concerns of liquidity across US and the European Union can further soften tech spending by banks over the short term in a year with slowing growth in bank tech budgets. Motilal Oswal said BFSI will drag FY24 growth.