Slowdown halves IT/BPO mergers in 2009
While the Tech Mahindra-Satyam deal bolstered the domestic numbers, the total value of cross-border deals (outbound and inbound combined) fell 83 percent to $156.5 million during January-July this year. The cross-border deal volume at 13 deals was a fraction of last year's level (47 deals).
A total of 16 PE transactions in the IT and BPO space grossed $108.6 million in January-July 2009, compared with 39 deals that yielded $258.3 million in the corresponding period last year. S Mahalingam, CFO and Executive Director, Tata Consultancy Services said, "The subdued level of M&A activity underlined the industry's thinking that given the tough environment, the focus should be on driving the day-to-day business."
According to Nasscom, India's IT and BPO industry is expected to clock an export revenue growth rate of 4-7 percent in the financial year (FY) 2010, substantially lower than the 16.3 percent recorded in FY 2009. Harish H V, Partner - Grant Thornton India said, "The entire mood in the industry had been weak due to the slowdown in key export markets. M&A was not on the top of the mind for most players. Although we expect the activity to pick-up in the coming months, the full-year numbers will still be lower than last year."
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