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Indian IT players give a tough fight to global peers

Financial products from Infosys & TCS gain share in APAC, Middle East and Eastern Europe

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Indian services players like Tata Consultancy Services (TCS), Infosys, Polaris Financial Technologies and Infrasoft Technologies are giving a tough fight to global peers in the financial product segment.

Among the top five vendors of Celent Big League Table 2012, while US-based was ranked first, Infosys and were ranked second and third respectively followed by Sopra Banking Software, and Temenos. The rankings are based on the net score of the deals made during the year. Celent is a research and advisory firm in financial services.

Celent’s Big League Table tracks core banking deals across markets and measures the number of new banking deals that vendors win for the 12 months starting from July 1, 2011 to June 30, 2012. Finacle is the banking product from Infosys and TCS’ banking offerings comes under the brand name Bancs.

The 2012 report attributed FIS number one ranking due to the wins it had in China, Infosys came second based on the traction it witnessed in Eastern Europe, Middle East, and Africa (EEMEA). And TCS led the metric on the back of its win in Asia Pacific (APAC), mostly in India, attributable to its data centers.

The reasons for the Indian IT players to lead the market is also because majority of core banking solutions growth came from Asia Pacific markets, with the mature markets of US and some parts of going slow towards implementation.  

TCS signed a total of 155 deals for the year, about 130 came from India, making them the leader by total deals. Outside of India, TCS scored deals with six small banks in Singapore, a large bank in China, and a midsize bank in Malaysia. Another notable win was the Indian operations of a large multinational financial services company with over $500 billion in assets globally.

“TCS had the highest overall deal score for the second straight year, leading for 2010-2012. In 2010-11, TCS had a megadeal with Deutsche Bank which propelled them to the top. This year, TCS signed an abundance of small community banks in India to their hosted services, far overshadowing the other vendors for total deals. TCS also won a number of other significant high value deals. Some of their top wins were four global locations for TC Ziraat Bankasi, a $92 billion asset bank from Turkey and AmBank Berhad, a $38 billion asset bank in Malaysia,” said the report.

Infosys’ Finacle that propelled the company’s third quarter numbers is also gaining market share. For the mentioned period Infosys too saw growth in regions like APAC, & EEMEA. The largest win was the India Post, which included installing their Finacle core in 150,000 post offices. Infosys did well selling in EEMEA—an increasingly active global region—signing 14 deals.

In addition to core banking, Infosys sold solutions for e-banking, mobile banking, CRM, treasury, and Finacle Inclusion, their product offering aimed at gathering deposits from the underbanked. They also signed one deal for their Finacle Lite Core Banking solution.

Haragopal Mangipudi, global head, Finacle, Infosys Technologies attributes the stellar performance of Finacle for the quarter ended December 31, 2012 to increased penetration that the sales team has done in markets like Middle East, South East Asia and APAC. “During this quarter alone we had 18 wins, compared to the 16 wins we had in the first half of FY13. We have seen growth from tier II and III banks and smaller divisions of tier I and II banks spending,” he added.

Analyst said that for the IT services players sale of products is a positive as it gives them higher margins. “Sale of licences and the maintenance work that they generally bag comes at a higher margin. In several cases these margins are higher than the company average,” said an analyst of a leading brokerage house.

But the impact of these deal wins, as of now, will not be significant. “Simply because banking products contribution to the revenues of both, Infosys and TCS, is small. They make just about 4-5% of the total revenue. Also this business is lumpy in nature,” said Ankita Somani, Research Analyst – IT, Angel Broking. Moreover majority of deals are from small to mid-tier banks.

Polaris Financial Technology that traditionally has had success in India, had 14 wins across six different countries, up from 10 in 2010-11. Mumbai-based Infrasoft Technologies also managed to increase its total sales number from 12 in 2010-2012 to 22 in 2011-2012.  

These wins, as Celent point out, is the reflection of the shift in the market. Large deals are not restricted to only market like North America, but have become much more global. For instance, for Temenos the large wins came from Brazil, for FIS it was China.

“Competition within core banking is increasingly becoming more intense as global players look to flush out the wide range of opportunities coming from emerging geographies. Compared to last year, the total number of core deals has gone up dramatically, going from 226 in 2010–11 to 445 in 2011–12,” said the report.

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