Indian IT expands market share in global banking services

Indian IT expands market share in global banking services

Bengaluru, Jan 23: Indian IT services companies are winning a bigger share of the outsourcing by the banking, financial services and insurance (BFSI) vertical, indicating that the companies are managing to win the confidence of customers even in the new digital world.
Data from IT outsourcing advisory Everest Group shows that the Indian service provider group (including TCS, Cognizant, Infosys, HCL Technologies, and Wipro) gained a market share of 1.5-2% over the global service provider group (including Accenture, Atos, Capgemini, CGI, DXC Technology, IBM, and NTT Data) between 2016 and 2018. The former now is estimated to have a market share of 42%, and the latter 58%.
Recent commentaries from TCS, Infosys and Wipro too suggest that the companies are making significant gains in the banking sector in North America. BFSI is by far the biggest vertical for IT services companies, accounting in many cases for 30% or more of total revenue. The industry had significantly slowed down on IT spending for about two years, as they dealt with various regulatory issues. But their outsourcing has now once again picked up smartly. Over $15 billion of BFSI contracts are up for renewal this year, and a lot more of discretionary spends are expected. Indian service providers are expected to get a good part of this.
“Indian-heritage IT services majors are continuing to increase their wallet share at the expense of IBM, DXC and others, due to strong execution capabilities, aggressive pricing and a genuine empathy from IT leaders to working with Indian firms, which has been 20 years in the making. Plus, we see firms like TCS, Wipro and Infosys prepared to take more risks to win clients over and also take more complex projects, and commit to outcomes,” said Phil Fersht of IT consultancy HfS Research.
Ronak Doshi, practice director at Everest Group, said the centre of this shift to Indian service providers is the fundamental war for talent, as BFSI enterprises need a talent alternative at speed and scale. “Investments in building this scaled talent pool helped the India pure-play service provider group to bounce back in 2018. With the exception of Capgemini and Accenture, the rest of the global players are not keeping up with their competition to make these investments, leading to wallet share shifts,” he said.
For TCS, the growth in revenue over the last five quarters has been driven primarily by BFSI. In the latest quarter, BFSI grew by 8.6% on a constant currency basis year-over-year, compared to 4.1% in the first quarter. Wipro has shown the best growth amongst the three, growing its BFSI sector at 14.4%, 16% and 17.5% in the three quarters of this year.