Indian IT service providers seem to be on an acquisition spree in Europe. What is driving the trend?
Europe (apart from UK, which was already using Indian providers) is opening up to Indian providers. These providers believe Europe requires larger nearshore presence and lot of cultural knowledge (especially non-English countries). Therefore, leveraging acquisition to build a scale of operation quickly. Moreover, given Europe’s challenges the target companies normally find difficult to grow in their traditional market and gain from getting acquired by larger companies that can leverage global delivery model to provide high value services at lower costs.
In what areas are the acquisitions being made. Any specific service areas that are being targeted?
Most acquisitions are in higher value consulting services related to Enterprise Applications. This includes HCL acquisition of Axon, Infosys acquisition of Lodestone, and Cognizant’s acquisition of 6 C1 group companies
Acquisitions, like you said, can be a good entry route for service providers. What would be the long term impact?
The impact is for everyone to see. Indian providers are doing well in Europe (not all but parts of it). Many of them have replaced incumbent MNCs as service providers for various clients. Moreover, the consulting experience helps them in front-ending “local” people with the clients whereas delivery can be from their global delivery network.
Interview was first published in Globalservicesmedia.com