India’s it Story so far was that of a few big players and a number of smaller ones. Now it’s time that some M&As Balance this Anomaly out
There is not much expectation of deals happening from the larger MNC players. The key rationale for these deals would be access to the Indian market. For instance, GroupOn acquired Sosasta.com for an undisclosed amount early this year. The leading deal in the first half of this year was Serco’s acquisition of BPO giant Intelenet Global Services for $634 million. The latter had access to clients in UK, US and India. Otherwise, in the software space, with global IT giants having set up shop in India, there is little they can gain in terms of price/portfolio/market advantage by acquiring smaller Indian software firms. Girish Vanvari, Executive Director, KPMG India, adds, “Many companies are sitting on idle cash. There are not too many targets to acquire, and at the same time the valuations are high.”
Globally, technology M&As are happening across the board as companies look a ways to ride the next wave in IT services, software and the internet. When it comes to outbound deals by Indian IT firms, a surprisingly large number of small deals have happened, and the focus in this case, apart from acquiring an attractive portfolio, has been easier entry to a newer geography. Wipro acquired the global oil and gas technology business of SAIC earlier this year for $150 million. Other deals in the first half of 2011 include GenPact’s acquisition of Headstrong Corporation for $550 million, Infosys’ acquisition of New Zealand-based Telecom Corporation’s Software Services Division for $3.9 million and Polaris Software Lab’s acquisition of IdenTrust Inc. for $20 million. In addition, there is plenty to gain for mid and small tier IT companies to merge since they do have complementary strengths to leverage. The first half of this year saw a major deal when iGate Corporation and Apex Partners completed their acquisition of 83% stake of Patni Computers for $1.21 billion. For iGate, this helps expand its reach beyond BFSI, which was Patni’s Achilles Heel to insurance, manufacturing, retail and distribution. HCL Technologies, which made the $658 million acquisition of Axon Group, has also looked bullish and is looking for similar deals that provide it growth opportunities. And other IT companies would find it inevitable too. M&As are going to be a key ingredient of Indian IT’s next leap forward, and there is no doubting that.
Globally, technology M&As are happening across the board as companies look a ways to ride the next wave in IT services, software and the internet. When it comes to outbound deals by Indian IT firms, a surprisingly large number of small deals have happened, and the focus in this case, apart from acquiring an attractive portfolio, has been easier entry to a newer geography. Wipro acquired the global oil and gas technology business of SAIC earlier this year for $150 million. Other deals in the first half of 2011 include GenPact’s acquisition of Headstrong Corporation for $550 million, Infosys’ acquisition of New Zealand-based Telecom Corporation’s Software Services Division for $3.9 million and Polaris Software Lab’s acquisition of IdenTrust Inc. for $20 million. In addition, there is plenty to gain for mid and small tier IT companies to merge since they do have complementary strengths to leverage. The first half of this year saw a major deal when iGate Corporation and Apex Partners completed their acquisition of 83% stake of Patni Computers for $1.21 billion. For iGate, this helps expand its reach beyond BFSI, which was Patni’s Achilles Heel to insurance, manufacturing, retail and distribution. HCL Technologies, which made the $658 million acquisition of Axon Group, has also looked bullish and is looking for similar deals that provide it growth opportunities. And other IT companies would find it inevitable too. M&As are going to be a key ingredient of Indian IT’s next leap forward, and there is no doubting that.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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