Banking Impact on IT

The Indian IT and BPO companies could have more trouble coming their way following the collapse of the sixth largest bank in the United States. With Wachovia becoming the latest victim of the sub-prime crisis and Citigroup acquiring the company, there are doubts about how this deal could impact the Indian vendors.

A report published in the Hindu Businessline said vendors like Infosys, Genpact and Cognizant have had Wachovia on their client list since 2005 while they also have Citigroup on their rolls. How the latter views the outsourcing deals post buyout would be a matter of crucial concern.

The newspaper said that while Infosys and Cognizant refused comment, Genpact CEO Pramod Bhasin claimed that it was too early to analyse implications of the acquisition. "We will wait and watch and continue with our business normally," Bhasin was quoted as saying by Businessline.

The paper also quoted analysts as saying that there will be no major impact till the integration is done. “Unlike the direct impact of Lehman Brothers, the effect of this deal will be a couple of quarters away for the Indian vendors,” said Mr S. Sabyasachi, research director at neoIT.

Analysts believe that the future of Wachovia’s engagement with Indian vendors will be driven by Citi’s outsourcing strategy though at a general level they believe that the turmoil could see a 15-20 per cent reduction in IT budgets of all financial institutions over the next two to three years.

Source:
BPO Watch