Alliances Galore
Today, most big Indian players have realized the power of togetherness. To create competencies without losing time, they're forming alliances with global companies. The partnerships are in the form of acquisitions, mergers, and joint ventures. While smaller companies are being acquired by the Indian players, they're going the JV route with bigger ones to quickly gain skills to satisfy the global demand. Wipro, for example, spent over $300 mn in the last three years on acquisitions by taking over smaller companies with deals in the range of $10-75 mn. However, it preferred to form a JV with Motorola for managed services. Similarly, TCS, Infosys, Rolta, NIIT, and other companies are developing partnerships of various types with other global players.

It's basically their urge to tap the emerging opportunities that IT players are joining hands with specialized global companies for a range of market areas, including dedicated software services, business process outsourcing, banking, managed services, and so on. TCS' JV with AT Kearney Procurement and UGS Corp, for example, is for setting up Asian Sourcing Network. The initiative is aimed to enable manufacturers to electronically source machine parts from low-cost countries. Allured by the Chinese potential, TCS has set up a JV in China in collaboration with three Chinese firms. There are other players also that are moving toward China. Satyam, for instance, has formed a JV with Microsoft China. The deal is to establish a Satyam Microsoft Adaptive Solution Center to jointly develop an enterprise solutions market on the Microsoft platform. The deal is aimed to target the demand in China.

Wipro has consolidated its positioning in the infrastructure management space by acquiring cMango, a US-based consulting firm. The company's shopping spree is spread across different countries to gain presence in the local markets. It has acquired European design firm NewLogic, Finland-based Saraware, Portugal company Enabler, and others. It's believed that with these alliances, Wipro will be able to diversify its service portfolio and expand its customer base in different countries.

Joint deals also abound on the BPO front. TCS, for example, has acquired a BPO firm in Chile, Comicrom that deals in banking and pension segments. Likewise, Satyam's BPO division, Nipuna Services, has gone to Hungary for setting up BPO operations there, while it already has similar operations in the USA and the UK.

The collaborations are also happening in niche areas like engineering services. Take the case of Rolta, which has signed a JV agreement with Stone & Webster Inc, an affiliate Shaw company, to target the high-end engineering and design services market. Thus, the number of such alliances is increasing constantly.

While companies are doing this for mutual gains, customers stand to gain, as they get expert services quickly. These alliances also ensure supplier proximity for the buyers, as the suppliers are readily available to provide services and after-sales support.

Pouring Investments
One of the most important economic objectives for any nation is to attract industrial investment for ensuring sustainable development. Of late, information and communication technologies (ICT) sectors have shown great promise in India for attracting foreign investment. A few years ago, most transnational players wanted to operate in or from India to exploit the cheaper manpower. However, today it's also the quality that draws. Plus, there's a huge potential in the Indian market that they want to leverage for business. Microsoft, for example, which is striving to get volume sales in India by offering local language software and other low-cost products, has decided to consolidate its presence here by planning an investment of $1.7 bn. Attracted by the integrated communications demand among the growing Indian enterprises, Cisco has decided to plow in over $1 bn investment. Likewise, Intel's is also going to be an over $1 bn spread over a few years. IBM has a still stronger commitment by promising to increase its investment to a whopping $6 bn over the next three years.

All these investments prove the maturity of the Indian market and the increasingly pleasant investment climate for MNCs.

Around the Corner
While the big boys almost control the industry, there are quite a few who will pose a challenge for those in the Top 20, and the next 30 players, and then the next 150 positions. Those who will have to be closely watched by the Top 20 leaders are SAP, which has shown astonishing growth rates; APC, the company that is now much more than a UPS company it used to be by offering products and solutions for the entire physical layer; Flextronics whose focus on the hot telecom vertical is taking it to great heights; Dell comes with a different business model, and now with aggressive India plans including manufacturing; and Acer who is riding the laptop and mobility wave.

It's true that the Top20 and the next 30 are increasing their pie size in the total industry. But their aspiration to grow and grab more market share is on everybody's mind. Beyond the Top 50 companies too, there is an increasing queue of very aggressive players, who are smaller, and likely to manage strong growth too, waiting to join the group of big boys. Times are surely going to get hotter and more interesting in the next few years.

Ibrahim Ahmad
ibrahima@cybermedia.co.in

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