Analysts say that if the banking crisis deepens, it could have the biggest impact on TCS, Infosys, Wipro and LTIMindtree. The reason for this is that these companies have the most business with the Financial Institution of America. Phil Fersht, founder of HfS Research, says that the condition of regional banks in America is critical. This has created panic among the companies providing them services. These include TCS and Infosys. Fersht said, ‘I spoke to the CEO of an IT firm this week. He said that there is panic in the entire sector. TCS, Infosys and Mindtree did not respond to queries.
Why is BFSI important?
Banks in North America lead the way in investing in technology in the retail banking sector worldwide. According to the data of financial advisory firm Celent, in the year 2022, the IT budget of these banks was $ 82 billion, while the world budget was $ 250 billion. Indian IT companies benefited greatly from the banks’ spending on tech budgets. According to Peter Bendor-Samuel, founder of IT consultancy research firm Everest Group, TCS, Infosys, Wipro and Mindtree have exposure to regional banks in North America through their banking verticals. The banking crisis will impact their BFSI growth in the short term.
According to NASSCOM, an organization of the IT industry, in the financial year 2023, 41 percent of the industry came from BFSI. North America’s share in this is more than 50 percent. 35% of Wipro’s revenue is from BFSI. Similarly, 31.5 percent of the country’s largest IT company TCS, 29.3 percent of Infosys and 20 percent of HCL’s revenue comes from this sector. BFSI accounts for 16 per cent of Tech Mahindra’s revenue. The banking crisis started in America. There, two banks, Silicon Valley Bank and Signature Bank, collapsed within five days. Europe’s biggest bank Credit Suisse is also struggling to survive.
Millions of jobs at risk
Vineet Nair, IT veteran and former CEO of HCL Technologies, said it is difficult to predict what will happen next, but new projects will be affected by the uncertain environment. This will increase cost pressure. This will lead to increased outsourcing and renegotiation of existing contracts as well. With this, IT companies will increase the use of artificial intelligence so that their profits are not affected. This can affect lakhs of jobs. When these companies announce their March quarter results, they will face tough questions from investors.
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