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Indian IT Companies Taking the M&A Route

ST Team
Monday, November 2, 2009
ST Team
To expand their business capabilities, the Indian IT giants Tata Consultancy Services (TCS), Infosys Technologies, and Wipro are taking the route of merger and acquisition (M&A). The companies are doing so to challenge the supremacy of world’s five big companies in the finance and outsourcing (FAO) space, Accenture, ACS, Capgemini, Genpact, and IBM, according to Mail Today.

According to a study done by leading consulting and research firm Everest, while the top five suppliers account for almost 70 percent of the FAO market, the major contenders, including TCS, Infosys, Wipro, and WNS that accounted for 55 percent of new contracts signed in 2008, are beginning to challenge their dominance.

The study says that the competitive intensity between FAO suppliers is driven by an increased focus on technology-led solutions. This leads to M&A and partnership activity to expand capabilities as well as pioneering of platform-based approaches. The study also highlights the role of technology, which is playing a much more invasive role in the FAO market. It shows how domestic players are steadily making inroads in the FAO market by effectively leveraging technology.

The study entitled ‘Technology flavors in FAO - from tools to platforms’ focuses on the different types of technologies in FAO. The technologies include add-on tools and solutions that enable technology augmentation and the current landscape of platform-based FAO offerings. “Platform-based FAO is, in fact, emerging as a key lever to create competitive differentiation in an increasingly competitive supplier market,” says Gaurav Gupta, Country Head, Everest.

Buyers’ needs are clearly driving the role of technology in FAO - a segment that is no longer considered a tie and run solution - as evidenced by recent increase in M&A activities and partnerships, particularly with independent software vendors, the study adds.
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