Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
12,014.1074.0
Stock Analysis, IPO, Mutual Funds, Bonds & More

More BFSI IT deals up for renewal this year

BSFI is increasingly seeing components of digitisation being built into larger contracts.

Updated: Sep 26, 2019, 11.03 AM IST
0Comments
BFSI Growth IT random
(This story originally appeared in on Sep 26, 2019)
BENGALURU: Eight IT contracts in banking, financial services & insurance (BFSI) came up for renewal in 2019, compared to six last year.

Among the largest of these were Norwegian financial services major DNB’s $725 million contract with IT firm Evry, and ING’s $330 million contract with Cognizant. UK insurance firm Resolution Life Insurance renewed its $1.1 billion deal with the Capita Group.

BFSI, which comprises over 30% of overall revenues for many Indian IT firms, is increasingly seeing components of digitisation being built into larger contracts. Jimit Arora, who leads Everest Group’s IT services research practice, said that structurally, the concept of renewals is evolving as clients look to construct deals which are shorter in nature and create more flexibility. “Consequently, we had a period over the last three years where deal sizes became smaller and deal durations became larger. Now you have a situation with modernisation coming in where clients are getting comfortable signing larger transactions,” he said. Depending on the incumbent relationship, Arora said they expect changes in scope. “If the client is ready for modernisation, then the deal will be larger,” he said.

Public disclosures on larger contracts has reduced substantially given the political environment in the US.

Arora said there is still around 30% churn in deals, that is, the deal does not go to the incumbent. Everest Group said there was only one renewal each in the manufacturing and healthcare sectors this year, compared to four last year. Centres for Medicare & Medicaid Services’s $563 million deal with Accenture is one of the larger renewal deals.

An analysis showed Europe is seeing a slight increase in renewal activity compared to the US and Canada. Among very large deals (TCV of over $1 billion each), three came up for renewal in 2019 as compared to seven last year. The share of IT and BPO renewal activity remained similar in the two years.

Graph BFSI

Also Read

Why Kunj Bansal is betting on consumer and BFSI stocks

Unlocking people’s potential key for BFSI players

BFSI, metals, FMCG expected to do well along with midcaps

Paytm surges in BFSI payments with 70% market share

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service