BFSI offshoring story is intact
posted in Outsourcing News and Top Outsourcing deals, Outsourcing to India |Source: sify.com
Offshoring in BFSI (banking, financial services and insurance) is not about to be blown away by the sub-prime crisis and the global economic slowdown.
If at all, this vertical, which constitutes 40% of the total ITITES exports from India, is only set to grow.
The reason, experts and analysts say, is the current very low penetration of Indian companies in this vertical - a miniscule 8%.
“We have only scratched the surface until now. At present, we are serving only large and tier I clients. A huge opportunity will open up once we start tapping the Tier II and III clients and enter new markets,” says Tata Consulting Services (TCS) financial services solutions president N Ganapathy Subramaniam.
TCS is the largest Indian service provider in this segment and earns over 43% of its revenues from this vertical. BFSI revenues of Infosys, Wirpo and Satyam are 36%, 24% and 23% of their total revenues.
JP Morgan’s Manoj Singla, Bhavin Shah, Mythilli Balakrishnan and Nishit Jasani also vouch for the future income expansion from BFSI.
“We believe that more than 50% of services from BFSI can be offshored and hence there is significant potential for Indian IT companies to get more work in the banking sector,” the analysts say.
As per IDC, BFSI accounts for 25% of all global IT spending. In this, the share of India is only 8% in revenue terms while it is 20% in terms of volume.
Nasscom chairman Ganesh Natarajan says the real opportunity in the BFSI segment lies in domain-oriented services like wealth management, investment banking, insurance and others, which are growing at 40% annually.
“The traditional bread and butter of the Indian companies like application development and maintenance (ADM) is growing only at 10%,” says Natarajan.
Subramaniam says within the IT budget of BFSI clients, the offshoring pie was growing. “What we are seeing is that banking and financial services clients are outsourcing more of their IT needs and deploying less and less work to their inhouse IT division,” he says.
TCS expects to grow its BFSI revenues at 30-35% over the next five years.
