IT firms mull M&As amid chaos

During their recently announced Q4 results, both TCS and Infosys indicated that they are actively seeking out opportunities in capacity-building acquisitions.

The TCS management said their customers were pursuing consolidation and, as technology partners, TCS will also seek to participate in such activities. So, they are closely tracking customer M&As.

“We made our largest acquisition during the past financial crisis and there are clearly opportunities. If we come across any, we will be open to them. We are a vertically structured company and there are opportunities in every vertical that are opening up,” said N. Ganapathy Subramaniam, chief operating officer, TCS, in an interview with Mint.

While TCS is not interested in pure workforce augmentation, they are looking out for companies with a complementary customer base with some intellectual property and patents. “We will also look into opportunities for market expansion and new geographies,” added Subramaniam.

In 2008, TCS bought Citigroup’s captive arm in India for $505 million. Many recent acquisitions by IT companies have been in the areas of digital analytics and marketing. Digital marketing solutions have obviously taken a big hit since the pandemic broke out as major sporting events have been cancelled and top advertising sectors, like travel and tourism, have been crippled.

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