Indian IT vendors cheer on status conversion of Goldman, Morgan

By siliconindia   |   Thursday, 25 September 2008, 23:05 IST
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Chennai: The global economic crisis has brought about some business opportunities for Indian IT vendors. As Goldman Sachs and Morgan Stanley gave up their independent investment banking status and morphed into a full-fledged bank, they will be forced to tweak their existing technology by adding more software and processes. They would have to adopt systems in areas such as retail banking, consumer banking, cards and corporate banking. Analysts say that this will eventually bring in more business opportunities for Indian IT vendors. This status change not only implies greater access to funds but also more regulation. For, more regulations, as a commercial bank, could mean more business for software service providers, reports the Economic Times. "It's an opportunity for IT companies because conversion to traditional banks means they need to add a lot of processes, new functions and areas," said Frost & Sullivan deputy director-ICT practice Kaustubh Dhavse. However, another analyst, on the request of anonymity, said, "It is a bit too early to determine if it will have a positive impact on vendors in India. Currently, it looks like this is a just a window that would help them borrow credit from Fed at a discounted rate. Moreover, they might acquire capability in retail banking by acquisition, instead of building it." According to experts, among Indian vendors, while TCS services Morgan Stanley, Goldman Sachs is an important client for Infosys. So, the existing vendors would have an edge if these newly-regulated banks are increasing their off shoring activity to India. However, it is not clear how seriously they would expand to other areas of commercial banking, but if they do, it would mean a huge business for product makers. "We will see increased spending on technology from Goldman and Morgan Stanley. We also expect product vendors to benefit greater than service vendors," said Shiva Ramani, CEO, Cybernet-SlashSupport (CSS), an outsourcing firm that is into technology support. These things apart, an interesting fact is that as a result of the conversion of these two banks, the investment banking space, often characterized with power and heavy pay packets, would probably cease to exist as a separate industry.

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