FACTBOX: Tech services M&A: Don't bet on Indian big buys
(Reuters) - 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 U.S. and Europe, and a large pool of English-speaking graduates have helped outsourcers such as Tata Consultancy Services (TCS.BO), Infosys (INFY.BO) and Wipro (WIPR.BO) ride an outsourcing boom.
* These firms offer services ranging from managing complex computer networks and call centers to software coding and maintaining IT operations. Clients include General Electric (GE.N), BT (BT.L), Citigroup (C.N) and Boeing (BA.N).
* 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 (HCLT.BO), one of India's top-five software exporters, bought UK firm Axon last year for about 440 million pounds ($720 million) 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 (C.N) back-office unit in India last year for about $505 million in cash.
* Wipro bought Citi Technology Services Ltd, which services Citi's businesses in 32 countries and provides IT infrastructure, for $127 million.
* Wipro bought U.S. technology firm Infocrossing Inc for an enterprise value of about $600 million in 2007, making it the company's largest acquisition.
* Bangalore-based Infosys paid $28 million in 2007 for the three captive back-office centers of Royal Philips Electronics (PHG.AS) to expand its presence in Europe.
HOW INDIAN IT FIRMS STACK UPP AGAINST GLOBAL PEERS
Revenue Mkt cap Staff
($ bln) ($ bln)
IBM (IBM.N) 103.6 160 398,455
HEWLETT-PACKARD (HPQ.N) 118.4 115 321,000
ACCENTURE (ACN.N) 21.6 29 177,000
TCS 6 26 143,000
INFOSYS 4.7 27 105,453
WIPRO 5 18 98,521
(Sources: Company websites, filings, Reuters data)
(Market value as of Oct 16, 2009)
($1=.6113 Pound)
(Compiled by Sumeet Chatterjee, Editing by Ian Geoghegan)
