NEC May Gain Foothold in India With Mphasis Buyout

by CXOtoday News Desk    Feb 14, 2014

nec

Only two weeks after Mphasis declared a new logo and a tagline: “Unleash the Next,” and also dropped parent company Hewlett Packard’s name from its corporate identity, it is now reported to be bought over by Japan-based software major, NEC.

According to a report published in Moneycontrol.com, NEC is in initial talks to buy out HP’s majority stake in Mphasis. Presently, HP holds 60.49% stake in Mphasis, which is valued at around Rs 4800 Crore. With this purchase, NEC is apparently seeking entry into Indian IT service space. The company is also open to offering premium to HP for its stake from its Current Market price (CMP), says a source.

The $1 billion global service provider that offers technology based solutions to clients across the world also informed that it is looking to emerge as a specialized player in the market, making significant investments in digital technologies like mobility, wearable computing and e-wallets.

Mphasis CEO Ganesh Ayyar said in a statement earlier that in the years to come, IT Services as a standalone business may cease to exist, and models such as ‘IT Services Inside’ and ‘Business Transaction as a Service’ will become mainstream. In such a scenario, rebranding reflects the company’s attempt to evolution into a highly differentiated, customer-centric company.

According to reports, at present Mphasis gets about 40% of its revenue from HP as against 55% a year ago, as the share of HP business has been falling steadily. This prompted the IT services company to seek non-HP revenues in banking, capital markets and insurance verticals to recompense the loss.

According to analysts, the IT industry is all about change and those companies that wish to stay relevant are going through transformation at different levels. As an outcome of this transformation, the refreshed brand represents innovation, imagination and unlimited possibilities through specialized business.

Although no spokespersons were available for comment officially, Analysts believe that buying Mphasis may be a strategic thing for NEC as it can gain access to Mphasis’ client base in banking and capital markets, insurance, manufacturing, communications, media & entertainment, healthcare & life sciences, transportation and logistics, retail and consumer packaged goods, energy & utilities, in India as well as the global market.

Moreover, Ayyar stated in a report that the company is geared up for a transformation journey to deliver cutting edge solutions in the Digital Market place. NEC may also have a stronger foothold in the Indian market with this buyout.

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