There should not be any question as to whether Tata Consultancy Services' (TCS) BaNCS core processing solution can scale. The company's biggest core banking customer, State Bank of India, has 17,385 branches - slightly less than Bank of America Corp., Wells Fargo & Co., JP Morgan Chase & Co. and all their recent acquisitions combined. The firm has also seen its proprietary technology products gain analyst prestige, with Gartner ranking BaNCS in its "Magic Quadrant," and Celent and Forrester giving the product strong ratings as well. TCS is engaged in a proof-of-concept project of its core for one U.S. bank, and is one of two finalists for an implementation here, says Sri Sundar, head of banking and financial services, TCS North America.

But proprietary software isn't where TCS is making its cash in the United States yet. Most American banks aren't going for soup-to-nuts replacements of their core processing systems, and particularly not with foreign vendors that have limited implementations here. Instead, TCS has made hay doing all the custom development work that has resulted from high-velocity mergers and regulatory demands in the U.S. market.

From a financial perspective, it has paid off. The entire company's fiscal year 2010 revenue was $6.3 billion, up 5.4%; banking, financial services and insurance make up about 45% of this. TCS's growth isn't surprising, analysts say. "Spending on applications outsourcing and consolidation, dominated by the Indian firms, and the offshore arms of IBM and Accenture, is on fire," writes Karl Keirsted, who covers IT Services and Enterprise Software for Kaufman Bros. "As the recovery trajectory for onshore-based IT services remains weaker than expected, the large global IT services firms are now more aggressively cutting prices, scaling up their offshore centers and upselling hardware to their existing services clients."

In the last few months, though, TCS executives say that U.S. banks are shifting their focus to front-office kinds of work, "searching for sustainable growth by enhancing the customer experience through self-service, business intelligence and core banking innovation," said Sundar, noting that the company is working on a payments project for a U.S. money center bank, and is seeing increased demand for payments gateway projects.

In the coming year, TCS will continue its push to make its existing proprietary banking and capital markets products compliant with U.S. regulations. "The most R&D we're investing in is bringing our products into the U.S. market," says Sundar. "We've been working with a lot of regulatory organizations as well as some of our pilot customers in the United States."

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