In an industry like outsourcing, wherein there is a constant push towards development and expansion, mergers and acquisitions are commonplace. Outsourcing companies acquire other companies in order to grow and expand into related business domains that they can integrate with their business, in the hopes that such actions would yield more advantages than disadvantages. In addition, companies acquire other companies in order to branch out their services and diversify their solutions so they can capitalize on a particular market, which are usually the ones that are booming.
One such outsourcing company making an acquisition is Indian outsourcer Genpact Limited (NYSE:G). The acquisition of IT solutions provider Headstrong Corporation was not much of a shocker to many in the industry when the bidding for the company started during the middle of March. What was a shocker though, was that it was Genpact Limited that acquired the company. When the first round of bidding began, it was reported that IBM (NYSE:IBM) and Hewlett Packard- EDS (NYSE:HPQ) were the first to show interest in acquiring the company while French global services company, Capgemini (EPA:CAP) was the frontrunner. But while it was not expected initially that Genpact would be the one to acquire Headstrong, many in the industry are expecting that this move by Genpact may help revive the company following its disappointing forecast in revenue growth last February. According to reports, Genpact is seeking to strengthen its financial services with this acquisition.
It is interesting to note that this is already the third acquisition by Genpact, following its acquisitions of Symphony Marketing Solutions and High Performance Partners LLC. Genpact’s acquisition of Symphony Marketing Solutions enabled them to strengthen their position in the analytics and data management sector. The Indian outsourcing company was also able to add retail, pharmaceutical and consumer packaged goods to their growing list of domain expertise.
Capgemini meanwhile, despite being outpaced in the Headstrong bid, still managed to make a notable acquisition in the European information technology sector, particularly with its acquisition of companies, Artesys and Avantias. The acquisition is slated towards providing a bigger room for growth for Capgemini, as these two companies will be able to help them position themselves better in the French market. The French market, according to Paul Hermelin, the Chief Executive Officer of Capgemini, represents only 22% of their company’s revenues and that acquisitions of Artesys and Avantias will allow them to conceive new, or improved, service offerings for their existing and future clients and to allow them to capitalize more on the French market.
Witnessing these two noteworthy acquisitions have sent out a perception that IT solutions are becoming the target of outsourcing companies and that IT providers are important in serving as a support to creating new and innovative service offerings for the market. IT solutions provided by the acquired companies Headstrong, Artesys and Avantias are seen by these two key players in the outsourcing industry as a great complement to their solutions and such acquisitions will enable them to, aside from increasing their flow of revenues, enhance their performance as outsourcing companies.
The second quarter of 2011 is well on its way to being regarded as a quarter of notable acquisitions in the IT industry since outsourcing companies seem to be on a roll in this department. With the drive towards technology and providing new and improved services, we must wait and see if this will bring on more acquisitions in the near future. We think it will.
Author: Jamee C.
No comments:
Post a Comment