BFSI segment likely to remain growth driver for Indian IT companies

In the recent full year financial numbers announced by Accenture Plc, its financial services segment saw the highest annual growth of 10% compared to other segments, with revenues growing from $11.6 billion in FY24 to $12.8 billion FY25. The company has seen several of their major financial services clients continue to invest in artificial intelligence led adoption and transformation amidst continuing macro-economic uncertainties in general and policy changes.  

At the company’s earnings call, Julie Sweet, chair and chief executive officer of the company called out America geography revenue growth of 5% in the fourth quarter to have been led by growth in banking and capital markets, industrials and software and platforms.

This growth was partially offset by decline in public service. “In banking, investment in digital core modernization remains strong with cloud adoption accelerating as AI demand grows. Here's what it looks like in practice, and I'm particularly proud of this work because the scale is frankly breathtaking, and we were trusted by this client with mission critical work,” Sweet said.  

Analysts at Nomura see the revenue growth momentum continuing to be strong in Financial Services with no noticeable change in the macroeconomic environment.

Given that Gen AI opportunities continue to mature gradually, even the India IT companies saw GenAI bookings rise from $3.0 billion in FY24 to $5.9 billion in FY25.

“We expect growth momentum in the financial services vertical to continue in the near term for Indian IT services companies. However, a sharp growth revival hinges on macroeconomic improvement particularly in the US. We prefer Infosys (INFO IN, Buy) and Cognizant (CTSH US, Buy) in large- caps (both Buy-rated); Coforge (COFORGE IN, Buy) in mid-caps and Firstsource (FSOL IN, Buy) in small-caps,” Nomura analysts said in their note.  

With Indian IT companies set to announce their second quarter results - starting from October 9th with Tata Consultancy Services kicking off the earnings season, followed by HCL Tech on October 13th, and Infosys on 16th - the management commentary around the recent developments on US H-1B visas and US job data, inflation pressure and decision-making cycle of US clients, will be keenly awaited.

Revenue from North America and the Banking, Insurance and Financial Services segment form a major portion of their revenues for these companies .