Well-timed acquisitions

In a fast deteriorating economic environment India’s IT majors appear to be looking beyond the immediate crisis plaguing the global economy.
While others are holding on to whatever cash they have, the likes of TCS, Wipro and HCL are using their stockpile to make strategic acquisitions to strengthen their business.
Wipro has acquired Citi Technology Services, Citigroup’s IT arm in India, in an all cash $127 million deal. Last week, HCL Tech had closed the acquisition of UK-based Axon Group for $658 million. And earlier TCS had bought out Citi’s captive BPO arm Citigroup Global Services for about $505 million.

These acquisitions have come at a time when the consensus is that the Indian IT industry is entering a difficult phase. IT budgets are usually the first to be slashed when companies need to cut costs. This is likely to be particularly severe in the case of the crisis hit banking sector, with serious implications for the Indian IT sector.
A significant chunk of the Indian IT industry’s revenues comes from the Banking and Financial Services (BFS) vertical. One can argue that the cost cutting could conceivably lead to outsourcing of more work to the cheaper offshore centres such as India. That possibility is, however, clouded somewhat by the virtual nationalisation of many financial institutions.

Source: The Economic Times