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Indian IT to feel the heat of Citigroup's fate
By siliconindia
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Tuesday, 25 November 2008, 23:26 IST |
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Bangalore: The already browbeaten Indian IT is to witness yet another spell of strain as the financial giant Citigroup, which has deals with Indian IT firms, has lost its valuation by almost 60 percent due to the financial downturn. The IT giants like TCS, Wipro, Satyam and Infosys have sizeable chunk of revenues coming from the financial institute.
A sale or merger of the bank, which is weighing sell off options of some part of its business, will definitely have an impact on TCS as the latter has a $2.5 billion (
12, 500 crore) revenue agreement with Citigroup for a period of over nine years. In case of a buyout of the bank, the worst affected would have be Polaris, wherein the former holds over 40 percent of stakes. Infact, the rumors on Citigroup pulled its shares down by 0.52 percent.
Besides, Citi not only catapults itself as the largest client for the IT companies but also means an account size of half a billion. Experts point out that Citi would easily account for around 5-6 percent of the IT giant�s revenue.
Moreover, despite the bailout being pronounced by the U.S. government against $306 billion losses incurred by the bank in mortgage-related assets, the threat still lingers for the companies as it can open contracts for renegotiation at lower prices. But as per Anand Tandon, Director Equities at Brics Securities, "Contracts are generally watertight but under abnormal circumstances everything is possible. It would be foolish for IT companies to walk out rather than settling down for less."
12, 500 crore) revenue agreement with Citigroup for a period of over nine years. In case of a buyout of the bank, the worst affected would have be Polaris, wherein the former holds over 40 percent of stakes. Infact, the rumors on Citigroup pulled its shares down by 0.52 percent.
Besides, Citi not only catapults itself as the largest client for the IT companies but also means an account size of half a billion. Experts point out that Citi would easily account for around 5-6 percent of the IT giant�s revenue.
Moreover, despite the bailout being pronounced by the U.S. government against $306 billion losses incurred by the bank in mortgage-related assets, the threat still lingers for the companies as it can open contracts for renegotiation at lower prices. But as per Anand Tandon, Director Equities at Brics Securities, "Contracts are generally watertight but under abnormal circumstances everything is possible. It would be foolish for IT companies to walk out rather than settling down for less."