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Mid-size Indian IT firms aggressive on acquisitions
By siliconindia
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Wednesday, 09 May 2007, 19:30 IST
Mumbai: That the 
700 crore Mastek and Hexaware Technologies have earmarked close to $40 million each for future acquisitions points to a larger trend in the Indian IT space: that large oversees acquisition are coming from small IT companies rather than a large ones, notes an Economic Times report.
While TCS, India's top ranked firm has done only two acquisitions, Infosys has made only one small acquisition so far, and Wipro has made only nine acquisitions so far, smaller firms have taken big strides in the arena. 3i Infotech, for example, has made over 11 acquisitions in 2005-06.
Also, Mastek, which recently exited its joint venture with Deloitte Consulting, has earmarked $45 million for acquisition in software space. Hexaware Technologies is now hunting for another $40 million acquisition, reports ET.
Mold-Tek Technologies told ET that its board has approved an agreement to acquire US-based KPO firm Cross Roads Detailing Inc for $1.3 million.
Hexaware Technologies acquired Testing Company Focus Frame for $34.5 million in 2006.
By acquiring Syndesis for $164 million in this January, Telecom product and software firm Subex Azure broke its own record of the largest software acquisition by the domestic company when it acquired Azure for $140 million the year before.
On the other hand, TCS has acquired Chilean BPO firm Comicrom for $23 million and core- baking software firm, FNS for $26 million.
?Mid-tier companies that are below $300 million need to attain scale to get invited to the same bids as the big firms. Some of them are focused on certain in those areas,? Lakshmi Nambiar, senior Associate with Avendus Advisors told ET.
This is one the reason why most of the mid-tier companies have a much higher risk. Large companies need to be more selective in acquiring companies because overseas IT firms typically operate at significantly lower margins, and an acquisition could hit their bottom line.
700 crore Mastek and Hexaware Technologies have earmarked close to $40 million each for future acquisitions points to a larger trend in the Indian IT space: that large oversees acquisition are coming from small IT companies rather than a large ones, notes an Economic Times report.
While TCS, India's top ranked firm has done only two acquisitions, Infosys has made only one small acquisition so far, and Wipro has made only nine acquisitions so far, smaller firms have taken big strides in the arena. 3i Infotech, for example, has made over 11 acquisitions in 2005-06.
Also, Mastek, which recently exited its joint venture with Deloitte Consulting, has earmarked $45 million for acquisition in software space. Hexaware Technologies is now hunting for another $40 million acquisition, reports ET.
Mold-Tek Technologies told ET that its board has approved an agreement to acquire US-based KPO firm Cross Roads Detailing Inc for $1.3 million.
Hexaware Technologies acquired Testing Company Focus Frame for $34.5 million in 2006.
By acquiring Syndesis for $164 million in this January, Telecom product and software firm Subex Azure broke its own record of the largest software acquisition by the domestic company when it acquired Azure for $140 million the year before.
On the other hand, TCS has acquired Chilean BPO firm Comicrom for $23 million and core- baking software firm, FNS for $26 million.
?Mid-tier companies that are below $300 million need to attain scale to get invited to the same bids as the big firms. Some of them are focused on certain in those areas,? Lakshmi Nambiar, senior Associate with Avendus Advisors told ET.
This is one the reason why most of the mid-tier companies have a much higher risk. Large companies need to be more selective in acquiring companies because overseas IT firms typically operate at significantly lower margins, and an acquisition could hit their bottom line.