HCLTech and Wipro, two of the four major IT companies in the country are seeing an increase in discretionary spending in banking, financial services and insurance (BFSI) compared to a few months ago, as per a report by Economic Times.
This is seen as a pleasant surprise for the IT industry.
The HCLTech reportedly told analysts last week about the uptick in the discretionary spending in BFSI, even as its other vertical continued to be driven by cost-takeout deals.
Wipro also saw an increase in its Capco consulting, which mainly focuses on BFSI clients and discretionary spending.
As per the report, analysts are hoping that a revival of discretionary spending will be widespread in the next two quarters, as they expect a rate cut to happen soon.
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Clients have reportedly hired consultants to discuss next year's budget and take a call on discretionary spending.
HSBC Global research reportedly said last week as per ET, that there has been an uptick in the discretionary spending among banking customers compared to a few months back.
Most other verticals are status quo and the demand there is still driven by cost optimisation deals, the research firm said.
The financial services vertical of HCLTech was impacted by the insourcing of one of its clients, State Street, during the June quarter. The company also expects the impact of divestiture to continue in the current quarters.
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Wipro in its first quarter earnings call said that it is seeing more green shots in discretionary spending, especially in the BFSI segment, and that was reflected by its consulting business Capco.
Wipro CEO Srini Pallia said that if one is looking at Capco of the BFSI segment, we are seeing growth coming from both Europe and the US.
Unlike the third and fourth largest IT service firms in the country, discretionary spending is still largely evading bigger rivals such as TCS and Infosys as stated in their first-quarter earnings statement. But the green shots have given experts some hope of revival, as per reports.
