Financial Daily from THE HINDU group of publications
Saturday, Feb 18, 2006
Financial Daily from THE HINDU group of publications Saturday, Feb 18, 2006 |
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Software Info-Tech - Mergers & Acquisitions Why IT majors fight shy of big ticket acquisitions — Panel discussions highlight challenges to Indian cos Our Bureau
Mumbai , Feb. 17 THE track record of IT service organisations globally in successfully managing large acquisitions has been very poor, according to Mr Francisco D'Souza, Chief Operating Officer, Cognizant Technology Solutions. Responding to a question on the reluctance of Tier-I Indian firms to dabble in big ticket acquisitions, leveraging their rich market capitalisation, he said research done on large acquisitions worldwide showed that they had not delivered value in the long run. This issue came up in a panel discussion debating the attractiveness of India as an offshoring destination for global firms at the Nasscom 2006 Summit. While the topic for discussion was "India or elsewhere: Why still India?", most of the panelists echoed the view that the more appropriate title would be "India and elsewhere". The Accenture's BPO Head in India, Mr Pankaj Vaish, said India was critical to the company's global model and the advantages that the country offered in terms of diverse skill sets could not be easily replicated elsewhere. He, however, added that clients always looked at multiple vendors who could offer services from multiple locations. The "reverse brain" that is happening of Indian professionals working overseas returning to India is also spurring this process. "If India has to sustain the industry growth, it will have to emerge as a consumer of its technology," said Mr Paul Asel, Senior Investment Officer, International Finance Corporation. Citing the example of China, he said it consumed more of its technology internally compared to India. Mr Joe Fernandes, Managing Principal, Everest Group, a global sourcing advisory firm, said the outsourcing market was so huge that it presented significant opportunities for the vendors. What will decide the choice of location is not where the work is done but how quickly it is executed. Nasscom as an association, Mr Fernandes said, should take the game from the country level to the city level and try to position the Tier-II cities as attractive destinations for offshoring. Many East European countries are emerging as challengers to India in servicing customers in Western Europe, said Mr Pascal Matzke, Principal Analyst, Forrester Europe. With Russia unlikely to join the European Union, the pricing is likely to remain stable and that is being exploited by the local vendors in East Europe, he added.
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