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Acquisitions – The growth story for Indian IT services Industry in 2020
Acquisitions – The growth story for Indian IT services Industry in 2020

March 22, 2021

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The technology industry's story during the Covid times

Covid-19 made 2020 a difficult year for most businesses with a lot of economic hardships. But for one segment where it played out as a boon was technology.

In my blog in July last year “Mergers and Acquisitions – A key growth strategy for technology companies during the Covid times” it was highlighted the top tech companies are sitting with large cash reserves and had started their acquisition spree taking advantage of the lucrative valuations, which were hit by the pandemic.

This acquisition spree continued during the rest of the year with companies making some of the largest technology deals in the last quarter.

Source: Visual Capitalist

Global IT services led expansion through acquisitions

Global IT services companies continued to focus on acquisitions as a key growth strategy in 2020 with over 100 deals, with cloud and digital being the key focus areas and Accenture leading the tally with over 30 acquisitions.

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Indian IT Services – The Acquisition Growth Story that continues in 2021

A similar trend was witnessed for the Indian IT services industry which kick started the post pandemic acquisition spree a little later than there global counterparts in July 2020 with Wipro acquiring Brazilian firm IVIA Servicos De Informatica Ltda and LTTS announcing acquisition of Orchestra (Read: Positive Signs for Indian IT companies as they kick-off expansion in the #newnormal), but it continued to gain steam all through the year with even the organic growth focused IT leader like TCS making a few. Acquiring digital and cloud capabilities, expanding reach to newer geographies remained the key objective behind the acquisitions.

2020 - A year of growth through acquisitions for Indian IT Services

Source: Company Press Releases

This focus on acquisitions seems to have grown stronger with the recent acquisition announcement of Wipro acquiring London based Capco, a financial services consultancy for $1.45 billion - The largest acquisition in the history of the company.

Another recent acquisition in the BPM segment was Tech Mahindra’s acquisition of 70% stake in Ireland-based Perigord Asset Holdings Ltd. which specializes in end-to-end packaging supply chain solutions to the life sciences industry.

Both these acquisitions highlight the growing focus of Indian IT-BPM companies in the European market and the opportunity they see in the BFSI and the Healthcare segment.  

Outlook

With Accenture yesterday announcing promising growth numbers and guidance, I believe that the pace of acquisition activity which has kick started well in the new year will continue to be promising going forward, as the demand for cloud expertise and digital continues to grow, with Europe emerging as a new focus. And acquisitions remains the fastest way to gain expertise with increased geographic reach.

What needs to be seen is how well these acquisitions are integrated, and these new capabilities are leveraged to convert into a stronger deal pipeline will decide the success of this inorganic growth focus.

Acquisition was one part of the 2020 story, to read more on the key trends that shaped-up the Global and Indian IT Services Industry download NASSCOM’s Strategic Review – “Technology Sector In India 2021- New World: The Future Is Virtual

 


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Neha Jain
Senior Analyst

Neha Jain

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