Indian IT companies are expected to see increased deal-win momentum in the banking, financial services, and insurance, or BFSI, vertical, driven by renewed tech spending, as uncertainty in western economies stabilises.
The BFSI sector, the largest revenue-generating business vertical for India’s $245 billion IT sector, had slowed down tech spending amid macroeconomic concerns. The year-on-year growth of the vertical has consistently dipped in fiscal 2023-2024 for the majority of IT majors. After more than a year of slump, analysts expect the demand environment to improve, resulting in more deals for the sector.
“The slump has bottomed out, and some deals are picking up, as the sector is generally accepting that possibly the US may not be facing rescission and is having a relatively resilient outlook on the economy. After a prolonged slowdown, clients will also now have to spend on technology; hence, there is pent-up demand,” said Kumar Rakesh, IT and auto analyst at BNP Paribas India.
In May, six deals were announced in the BFSI sector, and most of the deals being signed are for IT modernisation or digital transformation-related work, he said.
IT major Infosys Ltd., which had signed six deals in the BFSI space, noted in its commentary that it expects financial services to see a better outlook in the next year compared to the past year.
Further, Wipro Ltd. saw sequential growth in the fourth quarter, in the BFSI, after at least four quarters of being very soft. “What we are seeing is that in the BFSI sector, these are green shoots; we have seen some of the discretionary spend coming to us in the context of consulting,” said Wipro’s Chief Executive Officer Srinivas Pallia. The company expects to return to stability led by Capco, its BFSI-focused consulting acquisition, whose sequential revenue grew by 6.6%, and order booking grew by 43.6%.
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