The recent third quarter financial results of many IT companies in India are overshadowed by the beginning of the Trump regime in the USA. In the initial three weeks of the month of January 2025, the performance of NSE IT index was worse than the performance of Nifty 50. The reason for this is growing uncertainty in relation to geopolitical tensions and changes in immigration policies. Despite this, investors can expect a good situation due to gradual enhancement in the banking financial services and insurance (BFSI) sector and also due to expansion in discretionary expenses.

Performance of BFSI
The revenue growth in the BFSI segment in the third quarter of the financial year 2025 was better for companies such as Infosys, Tata Consultancy Services (TCS), and Wipro. In contrast to this, the revenue growth in the BFSI segment for HCL Technologies was falling at a slow rate in the third quarter of the financial year 2025, indicating progress in the operations of the company. The CEO of the HCL technologies, Vijayakumar stated that the company is recording progress in customer spendings in regard to financial services.

After the declaration of financial results of the companies, several companies’ management hinted about gradual progress in business deals and also an increase in discretionary expenses in the BFSI sector. The CEO of Wipro, Srini Pallia stated that the company expects for the budgets of the BFSI sector to expand slightly in the future.

The ISG Index highlights the performance of commercial outsourcing deals having worth of more than or equal to 5 million dollars. In the recent data of ISG index for the December quarter, it showed enhancement in contract rewards. In the quarter of December 2024, BFSI annual contract value for the America region (comprising the US) recorded a hike of 21 percent compared to the same period from the previous year. The president of ISG, Steve Hall, signals that there are positive trends in the BFSI segment of the managed services. The reason for this is due to the rise in the rate of discretionary expenses.

In the initial time period of the year 2024, there was a fall in customer spending but now the BFSI segment is coming back to health. In the third quarter of the financial year 2025, TCS company recorded a modest growth on a year-on-year basis in the BFSI segment compared to slow down in growth for about a year. Earlier Tech Mahindra had a small existence in the BFSI segment. However, now the company is anticipated to enhance its progress in financial services under the guidance and perspective of the new CEO of the company.

Impact of the improvement in BFSI
It will aid in the performance of IT firms in the upcoming period. Though, the improvement in total revenue growth is dependent on progress in other operating segments as well. Factors such as monetary policies of the government and stable macroeconomic conditions will play an important role in the improvement of the sector.

Importance of BFSI segment in IT services
The BFSI segment is the biggest contributor in the IT companies on an international level. In India, it is the largest operating segment for major IT firms. The major companies like Wipro and TCS recorded revenue growth in the BSFI segment in the range of about 32 to 33 percent in the financial year 2024-2025. While the growth in BFSI segment for Tech Mahindra was recorded around 16 percent. In the same period, the revenue growth in the BFSI segment for IT firms such as HCL was 22.1 percent and 27.4 percent for Infosys.