IT majors turn heat on BFSI-focused peers

The banking, financial services and insurance (BFSI) segment has for long been acknowledged as a key factor in propelling the domestic software industry into the big league.

While infotech companies have tried to address newer segments in their endeavour to become end-to-end players, the BFSI segment continues to fuel much of the growth.

But, in recent times BFSI-focused players seem to be losing out to their larger counterparts. Companies such as i-flex, Polaris and MphasiS that offer either a bouquet of products and services or just services are witnessing relatively marginal growth compared with larger IT players.

i-flex gets almost all its revenues from BFSI, for Polaris, it's about 85 per cent. And for the IT services arm of MphasiS, it's approximately 55 per cent. For the quarter ended March 2004, i-flex' revenues grew 34 per cent (or $13 million) to $48 million.

For the same period, Polaris saw its BFSI revenues rise by 14 per cent ($4 million) to $32 million. The same was the case with MphasiS, which saw its revenues grow 20 per cent ($3 million) to $13 million.

Compare this with bigger players such as Infosys, Wipro, Satyam or Cognizant. For example, Cognizant's BFSI revenue grew by almost 74 per cent (or $26 million) to $61 million for the quarter to March 2004 from $35 million the year-ago quarter.

In the last two sequential quarters alone, Cognizant has seen its BFSI revenue grow by approximately $8 to $9 million, respectively. Currently, Cognizant gets about 51 per cent of its revenues from BFSI.

Wipro is not far behind. Wipro Technologies, the IT services division of Wipro, saw its revenue from BFSI rise 68 per cent- though on a lower revenue base.

Revenues at Wipro from BFSI went up by $17 million to $42 million. At present Wipro gets about 17 per cent of its revenue from the BFSI segment, but this is slated to grow, according to analysts.

Though the big BFSI players Infosys and Satyam saw the numbers grow in absolute terms, their revenue growth in percentage terms was relatively muted.

Infosys grew its BFSI revenue by 23 per cent on a much larger revenue base, and Satyam by about 20 per cent. Infosys ended the March 2004 quarter with about $97 million in revenue from BFSI, up $18 million, from $79 million from the year-ago quarter.

Satyam ended the March 2004 quarter with about $49 million in revenue, up by $8 million, from $41 million from the year-ago quarter. For Infosys, about 33 per cent of its revenue came from the BFSI segment while it accounts for 31 per cent in the case of Satyam. Satyam, which was the second largest player in the BFSI space, lost out to Cognizant in the quarter ended March.

At the end of the March 2004 quarter, while Infosys continued to be numero uno in the BFSI stakes Cognizant, unseated Satyam to occupy the second slot. With Wipro seeing faster growth and Satyam's marginal growth, the duo seem to be positioned very close to one another.