Bangalore: Tata Consultancy Services Ltd (TCS), the country’s largest information technology services company, expects faster growth from its financial solutions business by offering products and solutions that generate higher margins and revenue to domestic and global banks.
This will help buffer against weakening revenues as the rupee appreciates against the dollar, the currency in which the Mumbai-based company bills a majority of its clients.
TCS, which has consolidated its banking products offerings under TCS Financial Solutions, a new business unit, will focus on selling its ‘core banking’ solution to large banks, and offer its products on a flexible licensing model to smaller banks and financial institutions.
“The solutions offering will fetch us better rates and better licence fees, which actually gives us better margins,” said N.G. Subramaniam, president of TCS Financial Solutions.
The business unit earned $170.09 million or around Rs700 crore for the year to March, an annual growth of 66%. TCS earned 42% of its revenue of Rs18,685 crore for the year to March from the banking, financial services and insurance segment, offering solutions to clients such as Deutsche Bank AG and ABN Amro NV.
The Indian IT services industry, battling rising wage costs and an appreciating rupee, faces challenges in improving productivity and ensuring better returns for the same effort.
“In addressing the challenge, you start with better pricing as well as time to marketing,” said S. Ramadorai, chief executive officer of TCS.
State Bank of India Ltd and Bank of China, among the world’s largest lenders with the latter having over 360 million accounts spread over 22,000 branches, have TCS’ core banking solution running their businesses.
TCS competes with Finacle, the banking solution of Infosys Technologies Ltd and Flexcube, the core bank solution of iFlex Solutions Ltd, a company controlled by Oracle Corp.
“Infosys has more customers in India, but in terms of the number of transactions done on a platform, the leader is TCS,” said Shirish Pathak, president of Finsight Media, which tracks the banking product business in the country.
3i Infotech Ltd, which owns the banking solutions product Premiat, is winning orders from customers in Eastern Europe and West Asia and is emerging competition to established players, he said.
TCS expects 100-150 deals for banking solutions in Asia Pacific, West Asia, Latin America and Africa over the next 12 to 18 months, with deal sizes between $5 million and $200 million. “Around 20% of them are large deals (between $30 million and $200 million) and the rest smaller deals (between $5 million and $10 million),” said Subramaniam.