Polaris sees fewer projects in US

American banks holding back contracts due to the sub-prime crisis.

Polaris Software Lab is witnessing banks, especially those in the east coast of the US, hold back projects against the backdrop of the sub-prime crisis while those in western and mid-west regions are exploring outsourcing options, Chairman and Chief Executive Officer Arun Jain told NewsWire18 today.

Polaris, which counts seven out of the top 10 Wall Street banks as its clients, is also facing delay in pricing negotiations.

Troubled Citibank contributes 39 per cent of Polaris Software' revenues.

Banking, financial services, and insurance segment contributes near 90 per cent of Polaris' revenues. There have been concerns of a cut in offshore technology budgets as a consequence of US sub-prime mortgage crisis, which has rocked the confidence of global financial services firms.

"Sub-prime is a major issue right now. There is a knee jerk reaction when somebody is losing $10 billion or $20 billion," Jain noted, alluding to massive write-offs announced by some global banks.

This has prompted some banks, especially those based in the larger US cities such as New York, to take stock of the situation and hold back some projects, he said. These banks are not open to incremental projects as of now.

However, Jain believes these are "short-term hold backs."

The unfavourable macro-economic environment and rising cost concerns have encouraged many banks in the western and mid-west regions to explore outsourcing possibilities. These, Jain noted, are banks that had not joined the outsourcing bandwagon earlier.

Also, Polaris is seeing order flow from the non-US arms of some of its clients such as Citibank.

"So it is a mixed bag. Overall, it is a stable kind of situation." Jain said the mood was cautious and the company was awaiting further clarity from clients. "We have to see how it pans out in three months."

Jain said there were yet no instances where customers have sought out-of-turn pricing negotiations but bill rate negotiations are turning into long drawn affairs.

"There is no out of turn (price) cuts at all. Pricing negotiations are going on. If the market was booming like 2005, then we would have got negotiated price earlier. But now those (pricing negotiations) are getting delayed."