Source: economictimes.indiatimes.com

The turbulence in the US financial services sector, hit by billions of dollars in losses owing to subprime and mortgage crisis, has not affected the fortunes of the Indian IT services biggies, at least for now. The BFSI segment has traditionally been the highest spenders on technology and it also accounts for significant portion of the revenues of India based IT services providers like TCS, Infosys, Wipro, Satyam, HCL and Cognizant.

For India based IT services majors, the latest quarterly results show that BFSI segment has recorded a very positive growth rate on a sequential basis, for some, in fact it has been higher than the company’s overall growth rate.

Analysts felt they would be able to maintain the current growth rate even during the current quarter.

In the case of Infosys, the BFSI segment recorded 7% sequential growth while for Wipro Technologies, it was 9.8%. TCS CEO S Ramadorai said, “BFSI continues to be strong and it has grown above the company rate sequentially.” The BFSI segment accounted for 44% of TCS revenues during the third quarter.

However, the big question is whether, these IT biggies would be able to maintain this growth rate given the background of a likely slowdown of US economy and the large financial services giants cutting down on their IT budgets to cut costs.

Offshore advisory firm, Tholons CEO Avinash Vashistha felt that the worst of subprime crisis is over for the Indian IT services majors and they are likely to maintain the current growth rate, if not higher, from the BFSI segment. In case of Cognizant, the BFSI segment accounted for 47% of its revenue and it grew 7% sequentially.

According to its survey among its BFSI segment on the IT budget growth in 2008, 90% did not expect their outsourcing budgets to decline. According to Siddharth Pai of TPI India, it is very unlikely that there will be any change in the current growth rates in the BFSI segment as the compulsory IT spending will continue though there might be bit of an impact on the new projects.

The IT biggies felt that BFSI segment under pressure to cut costs will actually look forward towards increased spending on technology to deliver the benefits.

Infosys senior VP and head Ashok Vemuri said, “Challenges that they are facing are creating more opportunities and this will actually see an increase in the overall spend.” Though, Girish Paranjape, president, financial solutions, Wipro Technologies felt that a clear picture will emerge only in the later part of this year on the actual spending pattern in the BFSI segment.

Source: www.earthtimes.org

Singapore - Developing a strong global sourcing and delivery strategy is the top concern of IT executives in the Asia-Pacific region this year, according to a study published on Monday. Research agency IDC said global delivery includes functions such as business process outsourcing, IT outsourcing and project-based services.

“It’s important for companies because it allows them to benefit from cost arbitrage and economies of scale,” The Business Times quoted IDC’s Philip Carter as saying. “It allows companies to achieve optimal business outcomes without the restriction of geographic boundaries.”

Domestic markets could be slow to gather momentum, particularly in developing nations, said Jenna Griffin, IDC senior analyst.

“Having service providers capable of offering both onshore and offshore services generates a stronger growth trajectory within the domestic market as a whole,” she said.

Some of the key challenges that companies face embarking on global sourcing strategies centre around service levels, and ensuring that the desired business outcomes are met, IDC said.

“This makes the selection of both global delivery players and locations vital to the success of the project,” Carter, IDC’s Asia-Pacific’s associate director, told the newspaper.

“The region represents a pot of gold for innovative vendors, but there are also significant pitfalls to trip those who fail to deliver on customer satisfaction and cost efficiency,” Griffin added.