Previous

Page - 2

The latest example in the Indian IT Business scenario is Wipro Acquiring QuanTech (company providing services in the area of CAD/CAM), New Logic, and Enabler. Further, in the last six months they have acquired four companies. The sizes of the acquisitions are bigger in terms of market ratings. They are confident that they will derive significant value from these companies in the upcoming years.
These acquisitions were meant to build certain geographical footprint, particularly in Europe. Through acquisitions, Wipro is also looking at building domain expertise, acquiring intellectual property and patents, and basically strengthening its consultancy skills.

Acquisitions are done to help to be compatible with industry growth rates. Looking at revenues after Acquisition, there was a slight increase in Wipro’s overall revenue by two percent. Their business strategy is to acquire companies with a range of business that were not present in their vertical. They are also looking for second tier cities to expand their operation, in order to minimize costs. To reap maximum benefits, Wipro has to work closely with the employees to understand their grievances and expectations after Acquisition.

Similarly, Satyam Computers acquired two companies, Knowledge Dynamics, a high-end consulting solutions provider in Business Intelligence, and Citisoft, a highly specialized European business and systems consulting firm. Acquiring companies of different countries is not always going to provide better ROI. The reasons like high pay package, less working hours, strict law policies are going to be major threats to the Indian IT top management in building their businesses in foreign soils. Extracting maximum value from the second and third tier organization is going to be a tough bargain.

IBM's acquisition of Daksh, a call centre in India, provided competitive edge to them over other companies. Presently, Indus Logic, a US Company, acquired Lambent Technologies in India (a company providing engineering services for the mobile industry) helping the company to get key clients like Sony, Autodesk. For companies situated in countries like USA, Europe, etc., acquiring companies in India and extracting benefits from them is not going to be as tough as for their Indian counter-parts. The simple reason is that they compensate by providing higher salary and bonus to employees working here. Hence, some Indian workers who give preference to higher salary rather than quality work can be easily managed in case of problems arising out of Acquisition. This is more like people who feel happy in getting Dowry from their partner.

Next

* Contributed by -
Ravi Kumar,
Currently pursuing MBA from BIM, Trichy,
Article published in KRIYA, July'06 Issue, the monthly magazine of the institute.