Time for the Kill

THESE ARE gloomy times, with net worth being the biggest

casualty of the bloodbath that stock markets have been witnessing. But there's

the upside too–some IT majors, who had tapped the market in the good times

about a year back are yet to translate the proceeds into the channels they

intended to. Infosys, HCL Technologies and Wipro, the Big Three, not necesarily

in that order, have bulding pockets. Infosys and Wipro raised $70 million

and $113 million, respectively, from the US market, while HCL Technologies

raised Rs 830 crore from the domestic market. Since then, the three have been

waiting for the kill.

And HCL Technologies has made the first move. With a war

chest that boasts a hefty Rs 1,200 crore, the Shiv Nadar-promoted company

recently acquired a 51% stake in Germany-based Deutsche Bank’s Indian software

arm. As per the deal, the Indian software major picked up 51% in the holding

company, which owns the Bangalore based Deutsche Software, for an undisclosed

amount. Also, HCL Tech will acquire the balance 49% over the next three years.

Says Shiv Nadar, "The joint venture will enable us to consolidate our

domain expertise in financial services space and deliver high-value services to

our customers across the globe."

According to analysts, it is a win-win situation for both

companies. In these slowdown times, it is becoming increasingly important to

have healthy global customers with high and recurring IT requirements. And

Deutsche Bank is one such client that Indian IT companies would like to have in

their portfolio.

The banking major earmarks over $4 billion as its IT budget,

with over $2 billion for IT applications alone. A fair amount of this is handled

by the bank’s software arm out of six international centers of competence in

Eschborn, London, New York, Singapore, Barcelona and Bangalore. HCL Technologies

is banking that it would get a bigger slice in the bank’s software business

thanks to the buyout.

It is already projecting an eight-to-ten-fold jump in the

revenues of Deutsche Software from the current $11.5 million (Rs 54 crore), to

$100 million by 2004. HCL Tech will acquire the banking and finance domain

expertise of the 450-strong Deutsche Software team and use it globally for other

customers. At present, the company has limited presence in this segment and the

acquisition will be a big boost to its knowledge base as well. And from the bank’s

perspective, the transaction will sharpen its overall focus on core competencies

as a financial institution.

Yograj Varma In New

Delhi