Global Acquisitions: Indian Impact?

by Sunil Kumar    Oct 17, 2006

2005: was the year of acquisitions globally. The trend continues in 2006.

The acquisition era has arrived. IT majors across the world are acquiring companies, whose products complement their existing portfolio.

Recent examples being IBM’s acquisition of MRO software for $740 million, HP buying Mercury Interactive for $450 billion, AV vendor Symantec buying Veritas, Oracle buying iFlex, Mcafee buying and integrating Onigma, etc.

But do these acquisitions have an impact on Indian enterprises? Questions on the issue posted to CIOs from various verticals evoked mixed responses.

Citing example of Mphasis acquisition by EDS, Lalit Sawhney, President, Computer Society of India (CSI), states that acquisitions are becoming more mainstream. He says, “It is not a one-way street because Indian companies are also increasingly going global. In Asia, it is an accepted fact that India is an IT powerhouse,” he says.

Seconding his thoughts, T. Srinivasan, managing director, Mercury Interactive (one of the companies acquired by HP) remarks, “Acquisitions by Indian companies and other multinationals globally do have an impact on India.”

He states that the impact of acquisitions is certainly positive. “Companies procure, implement and use services of all kinds. It will also have an impact on the manner in which IT and ITES companies serve the customers. Acquisitions will bring in more business and more customers to the kitty,” he adds.

“Acquisitions strengthen a company’s capability to deliver robust platforms. This enhances the capacity of a company to compete,” maintains Ishwar Jha, CIO, Zee Telefilms.

“It is very clear that acquisitions and consolidations are here to stay. The quicker we have to reconcile ourselves to this fact, the better it is for everyone to have the right perspective on this issue. This is also a spin off from the age-old adage that change is the only constant. M&A have a positive impact most of the time and markets and customers will enjoy the fruits of such synergies,” maintains Srinivisan.

However, not many enterprises are ready to embrace the concept of mergers and acquisitions.

“Acquisitions globally do not make much of an impact on India. But they do bring newer functionalities to the table”, says Zoeb Adenwala, CIO, Pidilite Industries.

Global acquisitions can have impact on India, given the off shoring/outsourcing wave, rapid cross country movement of funds and the increasing primacy, and role of India in the global scenario. However, the final word can be spoken only when the going gets even tougher and there is even more bang in the IT buck.