As the BFSI segment sees global ramifications from the collapse of the Silicon Valley Bank, Indian IT companies are likely to see major ramifications from the softening tech spends in the banking space, JP Morgan confirmed.

Appraising the impact of SVB collapse, JP Morgan’s report on Friday stated that IT giants TCS and Infosys have the highest SVB and US regional banking exposure. 

Regional banks in the US account for 2-3 per cent of their revenue, JP Morgan said in a note, adding that the exposure to SVB could be 10-20 basis points for TCS, Infosys and smaller rival LTIMindtree, with the Tata group company in the lead.

The impact of the global banking issues can be in two ways on Indian IT companies. Delays in deal ramp-ups impacting revenue conversions in the next two quarters, or delays in deal closures impacting revenue conversions in the next 3 to 4 quarters. 

Highest exposure

Of the Indian IT giants, TCS also has the highest global banking exposure at 38 per cent, followed by LTIMindtree at 37 per cent, followed by Wipro (35 per cent). 

“The collapse of SVB, Signature Bank and concerns of liquidity across US and the European Union can further soften tech spends by banks over the short term in a year with slowing growth in bank tech budgets,” JP Morgan, which has an “underweight” rating on the sector, said.