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Indian IT majors turn cautious: Lehman fallout

Source: PTI
September 16, 2008 20:04 IST
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With nearly half of their revenues coming from banking and financial services segments, India's top software exporters on Tuesday said they are closely monitoring the financial crisis spreading across markets.

While Infosys and Tata Consultancy Services, the country's two largest IT firms, said they do not comment on individual clients, the third largest IT firm in the country, Wipro said it was in dialogue with failed Lehman Brothers, although revenues from it were modest.

The fourth largest software exporter from the country Satyam also said that it was 'concerned' over the developments in the US. "We are very concerned about the recent development in the BFSI segment in the US. However, the Lehman Brothers episode will not have any impact on Satyam," Satyam Computer CFO Srinivas Vadlamani said.

HCL Technologies, however, said that the two US majors -- Lehman and Merrill Lynch -- were not its clients and therefore would not have any fallout for the company.

Shares of HCL Tech on Tuesday rose by over 3 per cent, while that of Infosys, TCS, Satyam and Wipro declined.

When one puts all of this together, there is some loss but given that most of the top five companies have over 40-45 per cent exposure to BFSI space, then mood is worried and concerned right now, said an analyst.

Already finding it tough to cope with the slowdown in the US, the beleaguered Indian IT vendors are likely to see some reversal in revenues coming out of their banking practice with the crisis of Lehman Brothers declaring bankruptcy, while another investment bank Merrill Lynch was in the process of being bought out by Bank of America.

As United States' customers hold back their IT spends, the subsequent quarter results could project a subdued growth on revenue and profitability along with this development, said an analyst.

Industry body Nasscom has projected a slower growth for the Indian IT industry at 25 per cent this fiscal, down from 29 per cent in the previous year.

In the June quarter, TCS earned 42 per cent of its revenues from banking, financial services and insurance segment, while Satyam and Wipro earned a little over a fifth of their earnings.

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