Satyam goes shopping for smaller KPOs abroad
Satyam Computer Services is scouting for a sub-$50-million overseas acquisition in the KPO space to deepen its own BPO offering.
By TNN |
HYDERABAD: India���s fourth-largest software exporter Satyam Computer Services is scouting for a sub-$50-million overseas acquisition in the knowledge process outsourcing space to deepen its own BPO offering. Satyam recently integrated its BPO operations (formerly Nipuna) with itself for capturing greater synergies and also expand its service offerings.
���BPO is one of the areas where we have not done any acquisitions so far. We are targeting small boutique BPO and knowledge process outsourcing (KPO) firms, where the deal size would be about $40-$50 million. We are scanning the markets in Europe, the US and the Asia Pacific region for the buyout as part of our inorganic growth strategy,��� said a senior company official.
Satyam has been actively following a ���string of pearl���s��� acquisition strategy involving niche small buyouts rather than large buyouts. The goal is to bridge existing competency gaps and shore up domain expertise wherever needed. The company has cash reserves of around Rs 6,400 crore.
���BPO is one of the areas where we have not done any acquisitions so far. We are targeting small boutique BPO and knowledge process outsourcing (KPO) firms, where the deal size would be about $40-$50 million. We are scanning the markets in Europe, the US and the Asia Pacific region for the buyout as part of our inorganic growth strategy,��� said a senior company official.
Satyam has been actively following a ���string of pearl���s��� acquisition strategy involving niche small buyouts rather than large buyouts. The goal is to bridge existing competency gaps and shore up domain expertise wherever needed. The company has cash reserves of around Rs 6,400 crore.
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In sync with this strategy, Satyam has so far acquired four consulting firms overseas since 2005. But the ticket size for each acquisition has been in the sub-$50-million range. According to industry trackers, the recessionary trends in the US may actually translate into some of the assets becoming cheaper for acquisition by Indian companies.
Low valuations could be a trigger for increased M&A activity by Indian IT services companies, who have huge piles of cash. All companies also have a stated M&A strategy to fill competency gaps in domain, skillsets and market access.
In April 2005, Satyam acquired US-based Citi Soft, a specialist consulting firm focusing on investment management, for around $38.7 million. The acquisition has helped Satyam deliver a comprehensive suite of solutions to its clients in the securities industry.
This was followed up with the company buying Singapore-based Knowledge Dynamics, a consulting solutions provider in the business intelligence space in July 2005. The transaction was an all-cash deal involving a consideration of $3.3 million. It is reckoned that the buyout has helped Satyam expand its customer base in the Asia Pacific region.
In October 2007, Satyam acquired UK-based Nitor, a niche consulting firm providing infrastructure management, in a $5.5-million all-cash deal. The acquisition has given Satyam access to major clients in the banking, pharma, telecom and media segments.
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Three months later, it acquired Bridge Strategy Group, a Chicago-based management consulting firm, in an all-cash deal of $35 million. The deal is expected to help Satyam pursue large deals, given that it already has expertise in consulting business process re-engineering and process consultancy.Consulting services contribute to about 10% of Satyam���s revenues. ���At any point in time, we look at five to six acquisitions. The areas we are looking at are BPO/KPO, IMS, engineering services,��� the official said.
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