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The Acquisition Dilemma

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DQI Bureau
New Update

Should we be very proud when Indian companies get acquired by

American or European companies? Or should we see it as a sign of greed and

surrender? As someone who has seen the evolution of Bangalore-based Network

Solutions, popularly known as NetSol, I had mixed feelings, initially. Here we

had one IT company which was very good, snatching big and critical orders from

under the nose of bigwigs. At a time when Indian IT names were beginning to make

a mark on the global scene, this company had a great potential to grow globally.

Just like India, the creators of this company had the vision and the guts to

make it a success story on the world map too. And then we hear that it has been

taken over. Essentially, what happened was that a great Indian entity was

conceptualized, produced and reared up, and then, when it was beginning to flap

its wings, it was sold away.

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It is important that good Indian software companies be supported

to resist acquisition temptations

Earlier we saw a similar thing in the case of Daksh-another

very good entity, created by brilliant Indian entrepreneurial minds, and then

almost gifted away to a foreign company. While Indian entrepreneurs may think

they have made good money, for the foreign companies the price is nothing big.

Is it a good idea to produce world-class businesses from India,

and then sell them off? I think Yes, and No. Yes, because it will always

encourage young and creative minds to make good money by creating and selling

good stuff, if they have live examples before them. And more people will like to

venture into this path, and will have role models to help them take the risks.

Moreover, this will enhance venture capitalists' confidence in India, and they

will look at India more liberally. Beyond that, the world will identify India as

a good place to shop for sunrise companies.

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All this, however, is a little short term. The negative side of

the picture is that India will never be able to really create those

international brands, which often become brand ambassadors for the country.

Today, companies such as IBM, Coke, Nike, Microsoft do America more proud than

America does to them. While companies like Daksh and NetSol had the potential to

become IBM and Microsoft equivalents, in their own way, but now that'll never

happen. Internationally recognized brands bring in a lot of value to the country

in terms of respect, contacts, reach, experience, and political and business

influence at an international level.

Further, the world appreciates those countries that have an

environment where such giants are born and grow. This means that if India is

able to produce equivalents of Coke and Nike, the net worth of India in the eyes

of international business community would go up.

Indian brands of global repute will help in another big way.

Employee morale. Today, we find a strong yearning among employees working in

Indian companies to join MNCs. This is because of better salaries, chances of

more global exposure, opportunities to work across global locations. Actually,

successful global companies from India will attract people from other countries

too, and that will only help enrich the experience pool. The rub-off effect will

lead to better business and employee practices in other Indian companies too.

It appears that advantages of not selling-off are more-at

least in the long term. And the entire IT industry, as well as the country, will

gain in the long term. It is, therefore, important that the Government,

along-with associations such as Nasscom, work out some strategy for this.  

I strongly feel that NASSCOM has done a great job in the first

phase of getting international recognition for Indian software talent. It is now

time for getting into the second phase-to create global brands out of India.

Brands that will not be tempted to sell-off for good money, but brands that will

resist all temptation and make plans to conquer the world on their own.

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