India to benefit from U.S., EU banking crisis
MUMBAI, INDIA — Industry analysts believe that the banking crisis in the United States (U.S.) and Europe could allow Indian IT firms to acquire captive technology units of banking and financial firms.
Over the last few weeks, the U.S. witnessed its second and third largest banking failures in history, while Swiss bank UBS had to buy out a failing Credit Suisse in Europe for over US$2 billion.
Business research consultancy HfS Research expects Indian services to benefit from these events as most banks have core modernization investments to make to remain competitive.
This, in turn, is expected to push more firms to an outsourcing model and away from global capability centers (GCCs) to handle operations and IT support.
Meanwhile, stock broker Kotak Securities said that a higher focus on cost take-outs among banking and financial companies would generate opportunities in application rationalization, higher offshoring, captive carve-outs, enabling automation, and vendor consolidation.
Kotak added that the deal between UBS and Credit Suisse alone could “provide significant opportunities for service providers to sign deals with long-term annuity revenue streams while also consolidating out the long tail of vendors.”
Other experts compared the current banking crisis to the 2008 financial crash, where Indian tech giants TCS, Infosys, Wipro, and Cognizant acquired parts of the captive businesses of banks, including Citi, ABN Amro, and UBS.
TCS, Infosys, Wipro, and Cognizant are included in the Time Doctor OA500, the first objective index of the world’s top 500 outsourcing companies.
