According to reports, the banking crisis in the US and Europe could provide Indian IT firms with an opportunity to acquire captives technology units of banking and financial firms in a repeat of the 2008 financial crisis.

IT companies such as TCS, Infosys, Wipro and Cognizant had acquired parts of the captive businesses of banks including Citi, ABN Amro and UBS after the 2008 crisis.

Similar opportunities are likely to come up in the second half of 2023-24, though some others expect increased investments on captive units.

“We expect there could be some big captive buyouts where the big services firms leverage their relatively healthy balance sheets to push forward a big win,” says Elena Christopher, chief research officer at business research consultancy HfS Research.

Over the last few weeks, the US has witnessed its second and third largest banking failures in history, while Swiss bank UBS had to buy out a failing Credit Suisse in Europe for over $2 billion.

HfS Research expects Indian services to benefit as most of the banks have core modernization investments to make to remain competitive as they recover from this situation. This is expected to put a stronger onus to move to an outsourcing model and away from global capability centers (GCCs) to handle operations and IT support.

Kotak Securities in a report said higher focus on cost take-outs among banking and financial companies amid the ongoing crisis will generate opportunities in the form of application rationalization, higher offshoring, captive carve-outs, enabling automation, and vendor consolidation, said a report by Kotak Securities.

“Credit Suisse has a captive operation in India. There could be some rationalization emerging from the merger. It is yet to be seen how the combined entity decides to plan its technology investment strategy,” says Mrinal Rai, principal analyst, ISG.