Even as the Indian IT industry is grappling with the rising rupee and fears of slowdown in the US economy impacting its business, there is a silver lining in the form of banking and financial services industry (BFSI) vertical. Having notched up $3 billion exports in this domain in the financial year 2006-07, the IT industry expects to double the revenue from this vertical in the next 3 years to $6 billion by 2010.

Having shown a CAGR of 29% and with captive operations by foreign banks on the rise in the country, it is the BFSI sector that may mitigate some of the pressures faced by Indian software companies.

?The cost pressure on banks across the world would trigger more offshoring in this space. Moreover, the scalability and market opportunity that India offers, makes captive investments attractive to players,? says Chandramouli, engagement manager at research and consulting firm Zinnov that carried out a study.

The study also pointed out that at least 45 foreign banks ran captive operations in India and in addition to partnering with Indian IT companies, most of them eventually aimed to launch their own service offerings.

For instance, the UK-based Standard Chartered Bank runs three captive support units across the country, employing 14,000 professionals, while Hong Kong-based HSBC employs 6,000 software and back-end support executives in four Indian centres. ABN AMRO and Lehman Brothers operate Indian captive units employing 3,200 and 1,000 professionals, respectively. Most recently, the US-based First Financial Bank launched captive back office and software operations in India engaging 300 executives.

The other positive factor is on the salary front with the BFSI sector showing on an average 16% rise in 2007, the highest in Asia. Bangalore paid the highest in the country, offering support staff between $6,600 and $15,500 while senior management earned between $62,000 and $82,000 annually, the study said.

While Tier-I urban centres in India like Bangalore, Chennai, Mumbai and National Capital Region (NCR) were popular investment destinations for captive BFSI facilities, some banks such as HSBC operated in Tier-II and Tier-III locations including Pune, Visakhapatnam and Kolkata.