Indian IT's hope from U.S. banks' M&As to turn sour
By siliconindia   |   Saturday, 14 February 2009, 00:48 IST   |    1 Comments
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Indian IT's hope from U.S. banks' M&As to turn sour
Mumbai: Those IT companies in India who expect a windfall from the merger and acquisition of some banks in the U.S now see their hope turns a stillborn. "The acquiring banks are opting not to integrate these systems and instead simply, scale up their own systems and scrap the systems of the target banks," said Gartner's Vice President-research, Peter Redshaw, told The Economic Times. As the banks are discarding the option of altering the systems, that will result in a lowered business for the IT companies. For instance, both Merrill Lynch and Bank of America are clients of TCS. This would have meant that TCS was a strong contender for any integration project by virtue of knowing the IT systems of both these banks. Similarly, JP Morgan and other large banks are clients of Infosys. Cautioned by the collapse of many of the financial service firms, the IT spending from the financial sector will not rebound in 2010, irrespective of the economic conditions. Redshaw estimates that overall, IT budgets of banks have shrunk by 15 percent. A majority of this, about 70 percent, is still internal IT spending and this likely to return to 2007-levels only by 2018. However, the banks are moving more work outside which imply that the external IT spends of this sector will get back on track by 2011-12.

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