TMT Blog: India Calling

It’s been some years since we first began to hear news of Indian technology businesses making plans for significant acquisition activity in the UK and Europe. In fact, we at Clearwater International made a trip over to Bangalore and Mumbai back in 2008 to visit some of the major names who were, at that time, looking seriously at the UK market – Wipro, Infosys, HCL, etc. In reality, with the exception of a small number of notable transactions, that activity has all but failed to materialise.

In 2008, HCL won a bidding war with Infosys to acquire UK business Axon in a landmark deal worth around $800m. The business spent the next 5 years trying to integrate and understand the company that they had acquired – a, from what we hear, somewhat torturous task. This deal aside (or perhaps because of this deal?), activity has been relatively thin. Most of the businesses that were mooted as major acquirers were achieving impressive growth rates without inorganic activity and they were also struggling to uncover what they were looking for in the UK market – sizeable assets with Enterprise customers that could benefit from an offshore workforce.

Now, analysts think all of this is about to change. India’s IT outsourcing industry faces a tough future, as cloud computing technologies threaten to eat away at its core market and acquisitions that accelerate their position in higher growth markets such as automation and consultancy are starting to become a necessity. So, acquisition activity is on the up. Infosys acquired automation business Panaya for $200m, Wipro paid $130m for BPaaS business Viteos and, in the UK, we have recently seen Mindtree pick up consulting business Bluefin and HCL venture back into the UK with desktop virtualisation business Point to Point (PPL).

It’s early days in terms of the number of deals done but could we be about to see that Indian invasion become a reality at last?