Israel's Ness buys APAR Infotech for $78 M
WASHINGTON: Pittsburgh-based APAR Infotech is partly owned by Rajeev Srivastava and his brother-in-law Kushal Desai and provides a range of software services as well as offshore software engineering development for large software product companies.
In a merger of sorts, it has been bought by Israel-based Ness Technologies, an IT company with its American operations headquartered in Hackensack, New Jersey.
APAR co-founder and CEO Srivastava said the acquisition has to do with the increasing interest in offshore IT development.
Businesses are increasingly hiring software developers in countries outside the U.S. because the labour costs are lower, according to American City Business Journals Inc., a website for business news.
APAR specialises in co-product development in the banking, insurance and finance sectors, as well as manufacturing, telecom, retail sales and logistics.
In addition to APAR's U.S. headquarters in Canonsburg, it has nine global offices and five software development/maintenance labs. It has 1,200 employees and annual revenue of over $60 million.
Regarding the sale of APAR, Srivastava said he does not consider the agreement a sale, although technically it is, as little of APAR will be lost in the transaction.
"The entire management and employees of APAR are involved in the new entity," he says. He will have a seat on the board and be president of what is now Ness' APAR business unit.
Srivastava said there is little overlap between the two companies and he does not expect any layoffs. Of the 1,200 employees, about 100 are in APAR's Canonsburg office.
Two years ago, APAR employed 100 offshore IT professionals. That grew to 450 people last year, and Srivastava hired another 150 this year. Most of the offshore employees are in India, with others in Britain, Singapore and Malaysia. The offshore employee count could be 1,000 by end of the year, Srivastava said.
New York-based Warburg Pincus LLC, a venture capital firm, also has equity in the company.
Upon completion of the merger, Ness anticipates its annual revenue will grow to $300 million and its workforce will increase by 40 percent to 3,800 employees. As the largest IT services and solutions provider in Israel, Ness employed 2,600 before the merger.
Srivastava and Desai founded the firm in June 1996 in Singapore, after Srivastava quit working for what was then Mastech Corp., and is now Green Tree-based iGATE Corp.
They moved the firm to Pittsburgh in October 1997. Since then, APAR has regularly been listed as the fastest-growing firm, including in the Pittsburgh Technology Council's annual awards and the Pittsburgh Business Times' Pittsburgh 100 Awards.
The Business Times named APAR the fastest-growing private company in Pittsburgh for 1999. Srivastava also was a finalist in the Ernst & Young Entrepreneur of the Year Award for 2000.