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M&A deals between Indian, N. American IT firms to rise
By siliconindia staff writer
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Monday, 02 February 2004, 20:30 IST
NEW DELHI: There will be increased merger and acquisition activity involving North American and Indian IT services vendors, infotech analyst firm Giga said in a report.
"Wipro's acquisition of AMS' utility practice is a harbinger of the things to come. North Amercian vendors will continue to merge or acquire Indian capabilities," Giga said citing the example of the merger of Headstrong with Indian vendor Techspan at the end of 2003.
"The Indian vendors now have the cash and market capitalisation to do most for the purchasing. Besides acquiring vertical specialist vendors like financial services or ERP, they will also purchase discreet practices of American vendors for on-site or US-based labour," it said.
As such, American vendors are experiencing more than expected downturn, flat or negative income and low stock prices and have laid staff, slashed prices and developed their own global delivery capability to compete with Indian vendors and improve their profit margins, Giga pointed out.
It predicted that Indian vendors will continue to move up the value chain by offering architecture, design, development and technology strategy services.