Indian IT Firms Get BFSI Boost As Tech Spend Recovers Among Financial Companies
Most growth recovery has been happening after the US Fed rate cut
Indian IT Firms Get BFSI Boost As Tech Spend Recovers Among Financial Companies
Not only large companies, but also mid-tier IT firms have reported good growth in BFSI vertical. LTIMindtree reported 2.3 per cent YoY rise in its BFSI revenue
Indian IT services companies across the board witnessed a demand uptick in the key BFSI (banking, financial services & insurance) vertical during the September quarter, raising hopes of a far better revenue growth in FY25 and beyond.
This growth has come after nearly six quarters of tepidness in the financial services space, which contributes more than 30 per cent of total revenue for all large Indian service providers and many mid-tier IT firms.
According to several top management firms, the demand recovery in the BFSI space is driven by the US clients, and the easing of cost pressure after the recent US Federal Reserve’s decision to cut interest rate by 50 basis points. Moreover, sentiment among BFSI clients has changed, leading to an uptick in the discretionary spend.
“In BFSI, financial institutions in the US are looking at sustaining the growth momentum with the Fed's first rate cut in four years. Stability in the macro brings initial signs of confidence. With the easing of interest rate environment, consumer confidence and industry confidence will get better. This can potentially lead to improved investment,” K. Krithivasan, CEO of TCS has said during the post earnings analyst call.
Similarly, on the back of Capco’s consulting-led services, Wipro has also seen a demand pickup in the discretionary spend among financial services clients.
“The strategy for us in the US market is to combine Wipro's strength of execution with Capco's consulting capabilities. Specific to discretionary spend…., obviously if Capco is growing for us that means there is a discretionary spend because their dependence is completely on discretionary spend which to me is good news in the context of what is coming in the future for us because some of this discretionary spend could be also transferred to the downstream revenue,” Srini Pallia, CEO of Wipro said during the analyst call.
Wipro’s Capco business grew 3.2 per cent quarter-on-quarter, while the overall BFSI vertical reported a growth of 2.7 per cent sequentially in constant currency basis.
Infosys has also said that BFSI is the vertical, where the company is witnessing growth coming back during the second quarter.
Not only large companies, but also mid-tier IT firms have reported good growth in BFSI vertical. LTIMindtree reported 2.3 per cent YoY rise in its BFSI revenue during the September quarter. Mphasis saw 3.2 per cent rise in its banking and financial services business in Q2 of FY25.
Customers are focused on operational efficiency and upgrade for the future with an eye on efficiency and automation. While pipeline continues to remain strong, we are yet to see large transformational deals in the BFSI, market analysts opine.