May 24, 2022
The M&A sector is expected to enter into Cloud computing, cybersecurity, application transformation and software service export sectors.
In the upcoming months, the valuations will see a decline along with a dire need for talent that will reach heights.
In recent years, the acquisition market has hit a peak and is in demand for technologies like Industry 4.0 and Edge computing.
However, considering the M&A activity in recent years, leading IT service providers have changed their routes with M&As.
M&As are currently how the Indian IT market is its capacity around Cloud computing, cybersecurity, application transformation and software service export sectors, as these industries are trying to meet client demand, especially in the wake of the pandemic. As clients increasingly focus on end-to-end transformation solutions, the greater the capability that a system integrator offers, it has the better chance to tap into a larger share of the client’s business.
Industry analysts add that in the upcoming months, the deal valuations will see a decline along but demand for talent will see new heights. It is also expected that over the next few years, the acquisition market has hit a peak as demand for technologies like Industry 4.0 and Edge computing increase.
Several industry experts are of the opinion that Indian companies usually look for niche consulting skills around key technologies while on the lookout for acquisitions. Generally, the acquisitions are part of a larger outsourcing deal that involves rebranding a customer’s IT staff.
Various domains such as fintech, healthcare, cybersecurity, energy, sustainability and supply chain are going to be next in the line for M&As. Cloud cybersecurity along with application transformation will be the key area while the demand for other technologies such as the Industry 4.0 and Edge is known to drive acquisitions going forward.
A captive delivery centre adds about 1000 to 2000 employees as compared to the acquisition of a startup or a technology company providing services, they add about 50 to 500 employees to the company’s talent pool.
All acquisitions of companies are based in top client locations. Largely, homegrown solution providers from product and software companies are in consulting and picking up firms from the domestic market in the US, UK, EU and Australia, to acquire more talent.
The work culture at product companies is considerably different from service providers. Usually, IT firms are sceptical about acquiring such companies because retaining talent is difficult. Harsha Iyengar also pointed out that with acquisitions being skills-heavy, having an Indian employee base does not offer these providers any specific labour arbitrage benefits.