Infosys Technologies banking, financial services and insurance (BFSI) vertical, which is headed by senior vice-president & global head (banking, capital markets & strategic global sourcing) Ashok Vemuri, has seen healthy growth during the quarter. Speaking to FE’s Surabhi Agarwal, he says that ?we are not out of the woods yet but the exit is surely visible?. Excerpts:
A significant amount of growth in volumes in Q2 has come on back of recovery in the BFSI vertical. How sustainable is it?
Clearly, there seems a stronger desire to convert some potential deals into transactions. We do see an exit of the downturn but looking at the macroeconomic parametres and client behaviour we are not completely out of the woods yet.
What kinds of deals are happening at this stage?
Out of the 35 new clients in Q2, six were in BFSI space. We are seeing a multitude of deals, the strongest being the post-merger integration kind of deals. There is a lot of traction in wealth management, corporate banking and core banking but we have seen very little action in the retail banking space which is an indicator of consumer spending in the US. We are seeing resurgence of business in Continental Europe. There is a lot of interest not only in the US and Europe but also in Asia and Australia.
Are deals that are happening now more of a one-time affair? Does merger of banks mean fewer clients in the long-run?
Yes. But, I would not say that consolidation in the BFSI space is leading to reduced business. It is probably leading to a reduced number of names that we would go after. In these merged entities there is a lot more to be done. There are also newer areas opening for us. For instance, we were never in the post-merger integration space in the past, now we are. Infosys has also expanded its definition of BFSI to go beyond banks and capital markets. We are tapping infrastructure companies, stock exchanges, credit card. There are also newer markets opening up. So we were never so big on Continental Europe. There is a big presence in Africa and Asia. Our clients in the western world have also increased spends in emerging markets like Asia or Latin America.
When the downturn began, the industry invited flak for focusing too much on BFSI and the US market. Do you see the equation changing?
The recession was driven by the downfall of the financial companies and they are the first to come out of it. All financial services companies are most innovative and dynamic. They are the ones who have the big bucks. If you look at large banks, they typically spend close to $6-8 billion on IT. Even with that spend the contribution of the top 10 service providers in this space is less than 10%. So there is a lot of headroom.
What about the US market?
I think from a percentage point of view it will continue to be the largest. But at the same time we have to ensure that our geographical footprint goes beyond the US. There is no point in concentrating on one market.
IT firms have moved work offshore to cut costs. Are clients more comfortable with it now?
We have ourselves benefited from it. Even clients are looking at moving more of the regular work offshore. Their attention to what was done from where and how is not very high. But, wherever there are opportunities for transformational work or post-merger integration, the component of onsite work will be high.
Banks are collapsing even today. Are you worried?
It is prudent to be worried at all times. I don’t think that we are out of the woods as yet. There is more information out there which is not necessary supporting a recovery that people are talking about. It will take sometime to work itself out.
