Acquisition is the Name of the Game

In  middle of effecting an epochal transition from its earlier legacy BPO business to offerings revolving around new technologies, the Indian IT sector is resorting to an age old strategy -

Published: 29th October 2017 11:25 AM  |   Last Updated: 29th October 2017 11:25 AM   |  A+A-

Express News Service

NEW DELHI: In  middle of effecting an epochal transition from its earlier legacy BPO business to offerings revolving around new technologies, the Indian IT sector is resorting to an age old strategy -- talent and knowledge acquisition through Mergers and Acquisitions (M&A). The last year has seen Indian and India-centric IT giants like Wipro, Infosys, Tech Mahindra and Cognizant all acquire firms, both big and small, in an effort to fill gaps in, or enhance, capabilities.

Last week, Cognizant announced that it would acquire Zone, one of the United Kingdom’s independent full-service digital agencies specialising in customer experience, digital strategy, technology and content creation. Just two days earlier, it had announced another -- that of Netcentric, an independent Adobe partner in Europe and digital experience and marketing solutions provider. 

Illustration: Suvajit Dey

Both acquisitions bring very particular skill sets  to Cognizant’s kitty. On the Netcentric acquisition, Gajen Kandiah, President, Cognizant Digital Business had pointed out that the acquisition extends its “Adobe Experience Cloud presence.” Zone meanwhile, brings the firm extra capabilities in application development, user experience and content strategy, all of which are set to beef up Cognizant’s established digital interactive expertise in experience design, human science-driven insights, and analytics. Moreover, Zone’s more than 220 digital agency experts will become part of  its digital business practice.

Such acquisitions also instantly expand reach in newer markets. “Combining Zone with Cognizant strengthens our end-to-end capabilities and provides more localized access for clients in the UK and across Europe,” Cognizant’s Santosh Thomas, President, Global Growth Markets, said.Cognizant is just one copany. India’s leading IT majors have all made acquisitions of one form or the other. Infosys, for example, has made similar moves. Apart from the issue-ridden $200 million acquisition of Israeli cloud-based quality management firm Panaya, it has also made a `63 crore acquisition of Brilliant Basics -- a UK-based product design and customer experience firm. The acquisition is expected to help Infosys éxpand its digital design services network to include Europe and the Middle East, and enhance its expertise across financial services, retail and telecom sectors.

Wipro, however, has been the most prolific proponent of the ‘string of pearls’ acquisition strategy. In 2016, the IT major bought HealthPlan Services for $460 million and Appirio for $500 million. More recently, in October, it acquired US-based business strategy consultancy firm Cooper for $8.5 million. Tech Mahindra, another member of the ‘Big 5’, spent $110 million to acquire US-based healthcare IT services and consulting firm The HCI Group.

“India’s IT firms have, for several years, known of the need to transform their offerings. However, they have lagged behind a bit in research and development in these fields. ergo, the spree of acquisitions,” pointed out a board member of a listed IT firm. “If you peruse the list of recent acquisitions, there are several small ticket ones -- a productive strategy for big players. They have huge cash reserves, and can afford to invest in smaller firms to acquire knowledge and talent -- especially in segments where they lag behind. It unlikely that the acquisition spree will taper off soon.” 

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