TCS, Infosys and Wipro strengthen company through M&A! Report

The country’s top IT companies- Tata Consultancy Services (TCS), Infosys and Wipro are reportedly likely to strengthen their acquisition business models to ensure it is in par with global trends. 

Many firms aboard have put projects at Captive Information Centres (GICs) on hold in view of the pandemic. Indian IT companies are trying to seize this opportunity by acquiring some of these captive GICs or smaller firms since the valuation is low at this point. 

According to a research done by NASSCOM (India’s apex IT Industry Body), although IT sectors across the globe have been hit by the pandemic, the drop in valuation of many companies has presented more acquisition opportunities and is likely to be beneficial to the Indian IT industry.

Reportedly, the top five tech companies—Facebook, Amazon, Alphabet, Apple and Microsoft—had a cash reserve of $471 billion as of April, 2020.

According to Bain and Co, the cash reserves might be used to fund new deals.Tech Giants have already started the acquisition spree and are exclusively focusing on digital engagement, virtual collaboration, cloud, data analytics, artificial intelligence, security and automation.

Most of the Indian IT companies have not announced fresh acquisitions during the pandemic so far. However, management at TCS, Wipro and Infosys reportedly indicated that they are hunting for good merger and acquisition (M&A) opportunities while releasing their most recent financial reports.  

Infosys in its annual report stated that the company has invested 3,032 crore on acquisitions during FY20. In February, it acquired Simplus, a US-based Salesforce partner, for $250 million. “We have enough of headroom and we’ll have to see if any assets come up which interests us during this period, but we are open to everything at this stage,” Infosys’ CEO Salil Parekh had said.

Similarly, TCS also indicated that it is actively looking for M&A opportunities. “Our largest M&A to date was actually executed at the peak of the global financial crisis. We are not shy of M&A and we believe that the best time to execute it is when nobody else is buying,” TCS CEO Rajesh Gopinathan said in the previous earnings call.

Wipro had recently bought HealthPlan Services (HPS), Appirio, Designit, Cooper, and International TechneGroup.