Infosys sees more biz from bank system integrations

BANGALORE: Infosys Technologies, which counts Bank of America, Royal Bank of Scotland and ABN Amro among its top customers, sees more opportunities emerge as these banks merge their business and technology systems in order to consolidate their operations and integrate better with the acquired entities.

For Infosys, which derives around 33% of its revenues from banking and financial services (BFSI) customers, consolidation among the top US and European banks is bringing new business, with some of these individual contracts worth around $500 million each, potentially.

“There are six integration projects we are currently looking at,” said Ashok Vemuri, senior vice-president and global head for banking and capital markets business at Infosys. “Fortunately, we have landed on the right side in most of these M&A developments,” he added without offering comments about any specific customers.

While BofA is in the process of integrating its systems with Merrill Lynch, RBS is attempting to consolidate its IT systems with ABN Amro. As these banks merge, they now face a mammoth task of integrating their software applications, consolidating their data centres and other trading platforms into single entity, so that their customers are able to transact without facing any merger-related issues.

Indeed, Infosys was able to increase and sustain its revenues from the BFSI segment even as business from manufacturing and telecom customers were coming down during the past two quarters. Revenues from BFSI contributed around 33.5% of the company’s total revenues during the quarter ended September 30, 2009, even as revenue contribution from manufacturing and telecom customers declined to 19.3% and 16.2%, respectively.

However, M&A practice is not an area where Indian companies have been positioned as leaders yet, especially with top consultants of the world, including Deloitte and Accenture, being the most preferred vendors.

“A year ago, Infosys was not among the ones to be called for such high end M&A related consulting, a Deloitte was called,” said Mr Vemuri who also heads Infosys’ strategic global sourcing business focused on large multi-year contracts. “However, we are now increasingly getting pulled into it across the projects related to change management, developing common systems with our front-end consulting capabilities,” he said.

US banks are not the only ones offering new outsourcing opportunities for merger related work. Lloyds TSB, which merged with HBOS, is also seeking partners to help the merged entity integrate its retail and wholesale banking systems through an information technology (IT) platform.

The company has already outsourced its human resource activities to Xansa two years ago, in a five-year deal. “The $19.5-billion merger betweenLloyds TSB and HBOS will lead to a massive IT systems’ consolidation,” a person familiar with the transaction told ET on conditions of anonymity.

And since offshoring will helps them save costs by as much as 30-40%, these merged banking entities are seeking to partner with a vendor having significant offshore presence.

“It’s more like changing the engine of a plane while it’s flying, we do have a focused practice on M&A now and we think there are similar opportunities in other sectors where we can leverage this,” added Mr Vemuri.
Meanwhile, rivals Cognizant, TCS and Wipro are also pursuing these opportunities as well and Infosys will need to prepare for competitive bidding by these companies.

“We are extremely conscious of our margins, and at time, we would let go business because of not wanting to compromise (on this front),” Mr Vemuri added.