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Indian IT firms not interested in blockbuster deals

ST Team
Monday, November 2, 2009
ST Team
Indian IT firms need to be more bold and risk taker, as the two decade old $60 billion IT sector has shown its disinterest in the acquisition of big firms. Instead, they have turned their focus on acquiring smaller IT divisions to tap opportunities in areas like utilities and healthcare.

Oracle and Dell have snapped up targets to grow beyond their core areas, while Xerox is buying Affiliated Computer Services (ACS) for $5.5 billion to move into the outsourcing sector. The top three Indian IT firms, TCS, Infosys and Wipro, can advance in size and clout, by acquiring companies with a wide client base, which will gradually help them to win multi-million dollar deals.

“For good measure these companies have been conserving their resources and as competitive pressure grows, now is the time to fill up some of their skill gaps through acquisitions,” said Ved Prakash Chaturvedi, Managing Director, Tata Asset Management.

These companies employ 100,000 staff each, majorly in low-cost India centers with pizza and Subway outlets, auditoriums, fitness centres and manicured lawns to move around the campuses. IBM, Accenture and HP have also expanded their India-based workforce, enabling them to move more of their overseas work to these centres. However, Infosys’ improved outlook failed to cheer markets this month, suggesting longer time for recovery.

The sector already faces competition from the big players and struggles to retain the experienced staff usually lured away by global rivals. “What might happen in the long term is customers might work with large, all services under one roof kind of vendors, which Indian vendors do not offer,” said Gartner India’s Principal Research Analyst Diptarup Chakraborti. The global clients are increasingly keen to partner vendors offering range of IT services, from managing complex computer networks and call centres to software coding.
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