In an industry where size matters, India's showpiece software services firms need to be bold and acquire firms or risk playing second fiddle.
In an industry where size matters, India's showpiece software services firms need to be bold and acquire firms or risk playing second fiddle, as bigger IT players emerge as one-stop shops for cost-conscious clients.
Following are key facts on India's software services sector:
Cheaper salaries, a quarter of those paid in the US and Europe, and a large pool of English-speaking graduates have helped outsourcers such as Tata Consultancy Services, Infosys and Wipro ride an outsourcing boom.
These firms offer services ranging from managing complex computer networks and call centres to software coding and maintaining IT operations. Clients include General Electric, BT, Citigroup and Boeing.
The export-driven sector has been badly hit by turmoil in the global financial sector — a key client base — and an economic downturn that forced businesses to trim technology spending and demand sharp price cuts.
Recent acquisitions by top Indian IT firms:
HCL Technologies Ltd, one of India's top five software exporters, bought UK firm Axon last year for about 440 mn pounds ($720 mn) after bigger rival Infosys refused to raise its bid. It was the biggest overseas buy by an Indian IT firm.
Tata Consultancy, part of Tata Group, a diversified conglomerate, acquired Citigroup Inc's back-office unit in India last year for about $505 mn in cash.
Wipro bought Citi Technology Services Ltd, which services Citi's businesses in 32 countries and provides IT infrastructure, for $127 mn.
Wipro bought US technology firm Infocrossing Inc for an enterprise value of about $600 mn in 2007, making it the company's largest acquisition.
Bangalore-based Infosys paid $28 mn in 2007 for the three captive back-office centres of Royal Philips Electronics to expand its presence in Europe.
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