TCS pins hopes on BFSI vertical revival
For BFSI vertical, 2023 was a year of resilience, balancing the challenges due to inflation and complex geopolitics against the initial benefits from rising interest rates
We have bottomed out in BFSI and also in North America. We continue to see pent-up demand in BFSI, which will be a growth driver in the medium to long term - K Krithivasan, CEO, TCS
Bengaluru: India’s largest IT services player, Tata Consultancy Services (TCS), sees growth revival in all important BFSI (banking, financial services & insurance) in the coming quarters boosting top line for the company.
According to the management, deceleration in the BFSI vertical has bottomed out and clients are likely to start spending in FY25.
“We have bottomed out in BFSI and also in North America. For the BFSI vertical, 2023 was a year of resilience, balancing the challenges due to inflation and complex geopolitics against the initial benefits from rising interest rates. In 2024, while evolving regulation, transforming technologies like generative AI, cybersecurity, embedded finance and green transition have become the constant driving change,” K Krithivasan, CEO of TCS, said during the analyst call.
“We continue to see pent-up demand in BFSI, which will be a growth driver in the medium to long term,” he added.
In the quarter ended March 2024, BFSI vertical saw a growth decline of 3.2 per cent year-on-year term. For the whole year, this vertical, which contributed around 32 per cent to total revenue, saw a degrowth of 1 per cent.
However, this largest vertical of TCS has started witnessing greenshoots oflate. Out of the total $13.2 billion TCV (total contract value) in Q4, TCV of BFS vertical was the highest at $4.1 billion. Bagging of large contract from UK insurer, Aviva helped the company to boost the deal pipeline in this vertical. In January, TCS bagged a 15-year deal expanding its existing engagement with UK-based insurance provider Aviva.
“The sub-segments within BFSI have started recovering with insurance, retail banking wealth management and capital markets have witnessed green shoots, with strong participation of clients in the new-age technologies,” Prabhudas Lilladher wrote in a note.
“This has been highlighted by the company during the analyst call. “Insurance is doing well. Capital markets is (doing well) - almost every stock market is doing well. So, there are increasing opportunities that are coming.On the retail banking side, clearly, payments and wealth management are two significant areas where we are (seeing) customers wanting to try out new technologies and especially portfolio management, portfolio amortization and using GenAI to rebalance,” Chief Operating Officer of TCS, N Ganapathy Subramaniam said.
Meanwhile, outsourcing market is waiting for the interest rate reduction by the US Federal Reserve, which is likely to boost IT spending by financial institutions.
