Global banks’ tech revival boosts Indian IT sector

Global banks have resumed technology projects that were paused in 2023, bringing optimism to the $254 billion Indian IT sector, which derives a significant portion of its revenue from banking, financial services, and insurance (BFSI) clients.

After six quarters of subdued spending following the Silicon Valley Bank collapse, quarterly reports from IT giants Tata Consultancy Services (TCS), Infosys, and Wipro indicate a nascent recovery in BFSI client demand.

“BFSI should come out faster as they are the ones that went into the caution mode first,” said TCS chief financial officer Samir Seksaria.

JPMorgan has committed an additional $1.5 billion to technology spending in 2024, while Bank of America has earmarked $4 billion for new tech initiatives, including generative AI development.

An analysis of the top five US banks’ earnings for the quarter ended June revealed a 6.8 per cent year-on-year increase in tech investments.

These investments are primarily focused on enhancing regulatory compliance, customer experience, cybersecurity, and cloud migration.

The anticipated interest rate cut by the US Federal Reserve could further stimulate economic activity and encourage larger technology budgets. Moreover, a weaker rupee exchange rate would benefit Indian IT firms that primarily bill in US dollars.

Attribution: Reuters

Subediting: M. S. Salama