BENGALURU (Reuters) – Top technology services firms are offering payment deferrals, discounts of up to 20% and other sweeteners to some U.S. banks to keep their business as the pandemic forces Wall Street to cut tech budgets, according to executives involved in the talks.
FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo
Large Wall Street banks are widely expected to reduce overall budgets and discretionary tech spending, which includes areas such as technology consulting services, business analytics, research and design and process management projects.
Accenture, Tata Consultancy Services, Infosys and Cognizant Technology Solutions – among the world’s largest tech services vendors – have offered to do more for them at lower rates, three executives who have taken part in the discussions told Reuters.
The aim is to secure new contracts as well as to keep the relationships with the banks ticking over so that they can be expanded once more post-pandemic, they added.
At least half a dozen meetings have taken place over the past month between the tech companies and some of the largest U.S. banks including JPMorgan Chase & Co, Bank of America and Citigroup, said the executives who all requested anonymity as the discussions were confidential.
“The current crisis facing the IT industry is potentially bigger than the 2008 recession. We have no option but to use every tactic necessary, including heavy discounts, to gain a competitive edge,” said one.
Major IT outsourcing contracts, which include software maintenance, cloud computing and analytics, are worth several hundreds of millions of dollars and typically stretch over many years.
As well as some discounts and payment deferrals of typically between one to four months, the tech companies are in some cases offering to buy up computer data centers from their clients and the existing systems and hardware that are being replaced or upgraded at banks, the executives said.
Accenture said it was working with banking clients to address the implications of the crisis but did not comment on pricing talks. Cognizant and Infosys also declined to comment on its talks with clients, while Tata Consultancy did not respond to a request for comment.
JPMorgan, Bank of America and Citigroup declined to comment on their discussions with vendors.
The negotiations are ongoing and no agreements have been struck yet as many leading banks have delayed finalizing their tech budgets due to the uncertainty caused by the coronavirus crisis, according to the sources.
WIDER INDUSTRY TREND
The proposals reflect a wider trend, about half a dozen of tech industry insiders told Reuters, with discounts of varying size and investment commitments featuring in many discussions between vendors…