IT Services Companies See Demand Recovery in H2 FY25 Led by BFSI BFSI is the largest vertical for most Indian IT services companies contributing maximum revenue.

Indian IT services companies are expecting a recovery in demand in the second half of FY25, led by the banking, financial services and insurance (BFSI) sector. BFSI is the largest vertical for most of these companies contributing maximum revenue.

For Infosys, BFSI is the largest vertical that grew 2.3 per cent YoY in constant currency and contributed 27.2 per cent to the total revenue as of the September quarter.

"Financial Services saw continued growth momentum in Q2 with traction in cost optimization through large outsourcing and transformation opportunities. We saw discretionary spend uptick in capital markets, mortgages and cards and payments," Jayesh Sanghrajka Chief Financial Officer, Infosys said in a post-earnings analyst call.

For Tata Consultancy Services (TCS), BFSI vertical grew 0.1 per cent YoY and contributed 30.8 per cent to the total revenue during Q2.

"In BFSI, financial institutions in the US are looking at sustaining the growth momentum with the Fed's first trade cut in four years. Stability in the macro brings initial signs of confidence. With the easing of interest rate environment, consumer confidence and industry confidence will get better. This can potentially lead to improved investment. Customers are focused on operational efficiency and upgrade for the future with an eye on efficiency and automation. While pipeline continues to remain strong, we are yet to see large transformational deals in the BFSI," K Krithivasan, CEO and MD, TCS said.

For Wipro, BFSI grew 0.6 per cent YoY in constant currency and contributed 34.8 per cent to the revenue as of the September quarter.

"Our BFSI business has a component of Capco which has higher furloughs compared to the rest of the work. It is factored into our guidance. But other than that, I think the momentum in BFSI has been fairly strong. We have done well," said Aparna Iyer, CFO, Wipro.

Moreover, these companies are seeing an uptick in smaller deals even as larger clients are continuing to delay decision making and hold back discretionary spending.

"For deals below USD 50 million in value which is outside of our large deals, we have seen a double-digit increase in that pipeline. So, we see a lot more traction there," Salil Parekh, CEO and MD, Infosys said in a post-earnings call.

For Wipro, it seems to be a good mix of deals. "If you look at the kind of opportunities we get especially (in terms of) discretionary spend around Capco, BFSI, some of them tend to be much smaller, they need not be large deals. Overall, I think the way I see it is, we do have smaller deals, mid-size deals and large deals and we continue to remain optimistic on those pipeline," said Srini Pallia, CEO and MD, Wipro.