IT/ITES M&A Deals up 12% in 2008

M&A deals for IT and ITES sectors were up by 12% in 2008 with Indian companies riding on the early fallouts of recession in the other economies. The recession provides an opportunity to the IT and ITES sector to consolidate by acquiring and buying-out companies across the globe. According to Grant Thornton India, the average deal size in 2008 increased to $32.86 million ($18.15 million).

For 2008, the total number of deals involving Indian IT/ITES companies increased by nearly 12% : $3.22 billion (in 98 deals) compared with $2.88 billion (in 159 deals) in 2007.

Some major deals of the year were:

• HCL Technologies acquired UK consulting firm Axon for $658 million
• TCS bought Citi’s BPO for $505-million
• Wipro took over Citi’s Technology Services for $127 million
• 3i Infotech acquired US-based Regulus Group for $80 million

Very recently, Rolta acquired Chicago based Piocon Technologies – their third acquisition this year (after WhittmanHart Consulting and Broech Corporation).

The significant trend in 2008 has been of service providers acquiring captive units that were set up by the clients. The real picture will come out in 2009 when lesser spending on IT will show it’s impact on Indian companies.

Do you think the M&A trend will continue in 2009?