Despite positive signs from most quarters, the Indian information technology (IT) services sector might see problems across some business verticals in 2015, clouding client spending during the year.

Among other things, some experts have concerns on banking, the largest vertical for most Indian IT service companies. There are concerns around large banks incurring heavy fines in the US, brokerage firm Motilal Oswal said in a report earlier this month. Additionally, several of the top 10 clients in the banking space in the US are looking to set up captive units and lower their exposure to outsourcing, which could further hit Indian IT services firms. Sectors such as retail and energy, growing at a strong momentum in recent quarters, might also see some slowing. Retail is anticipated to grow slower as the budget of clients in this sector depends heavily on the success of festive season sales – these have not done very well, Motilal Oswal said. Also, the sharp decline in oil prices is seen affecting energy companies negatively.

Markets are likely to open higher tracking gains in their Asian peers. However, some volatility may be expected later in the session as traders will remain cautious in a truncated week ahead of the F&O expiry on Wednesday.

For cues investors will also watch the US jobless data which is to be released later this week.

IT major Infosys' decision to appoint Ritika Suri as its head of mergers & acquisitions reflects the new found aggression of the Bangalore-based company in the M&A landscape.

Suri, who had joined Infosys couple of months ago from German software maker SAP where she was a senior VP, is based out of the US and brings to the table her knowledge about client geographies where most of the acquisition targets are located, according to senior official sources.

Markets opened higher, amid firm global cues, with bank and IT shares leading the gains in early trades.

At 9:30AM, the 30-share Sensex was up 269 points at 27,395 and the 50-share Nifty was up 77 points at 8,236.

Benchmark share indices extended losses tracking weak global markets as crude prices continue to fall further. Further, selling by foreign funds in the previous sessions continue to weigh on investor sentiment.

By 9:40AM, the Sensex was lower by 254 points at 27,065 mark and the Nifty slipped by 75 points at 8,148 levels.

Even as the hostage scenario unfolds at Sydney, Australia, India's second largest IT services provider Infosys confirmed that one of its employee has been taken as a hostage.

"We can confirm that one Infosys employee is among the hostages at the Lindt Cafe in Sydney. We are also in the process of confirming the whereabouts of all our other employees in the city. We are in constant touch with the local authorities and Indian Consulate in Sydney for updates on the situation on ground," said the company in a statement.

Having remained the largest private sector employer for decades, the Indian information technology (IT) services sector is perhaps set for a change as three of its largest companies — Tata Consultancy Services (TCS), Infosys and Wipro, have remained slow on hiring in the past few years, hinted at bottom fishing of workforce and ‘restructured’ their senior-level staff.

According to experts, the shift in technology landscape and the resultant change in demand from clients is the major reason for this swing.

Markets opened marginally higher tracking gains in their Asian peers and overnight gains on Wall Street with IT majors leading the gains.

Meanwhile, markets are likely to remain volatile ahead of the release of consumer price inflation and industrial production data due later today.

Tata Consultancy Services (TCS), India’s largest information-technology services player, is learnt to be undergoing a restructuring exercise. The workforce optimisation programme, in the planning stage, is expected to be over in February 2015.

According to company sources, every vertical has been asked to identify senior staff who have not been very productive. Employees who have been put under the scanner are above the rank of consultant — senior consultant, principal consultant, vice-presidents, etc.

Infosys co-founders N R Narayana Murthy, Nandan Nilekani, Dinesh K and S D Shibulal’s wife , Kumari Shibulal, along with their families, sold 32.6 million shares in the country’s second-largest information technology services company on Monday, for an overall amount of Rs 6,484 crore.

The share sale led to a sharp plunge in the IT heavyweight’s share price, eroding about Rs 12,400 crore (at 62/$) from the company’s market capitalisation. The Infosys stock hit a month’s low during intra-day trade on Monday, before ending five per cent lower at Rs 1,972 on the National Stock Exchange.

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