Aricent Inc., a Palo Alto, California-based communications software firm, said it has acquired New-York based DataLinx Corp., which offers consulting, system integration and software development services, for about $30 million (Rs121.2 crore), as part of its strategy to expand consulting services business for telecom operators.
The acquisition will add 400 consultants and developers to Aricent’s 7,500-strong staff. Closely held DataLinx has revenues of about $100 million. It will also enable Aricent to try and boost revenues from some 350 clients worldwide that include Bharti Airtel Ltd, Cisco Systems Inc., Motorola Inc., Nokia OYJ, Sony Ericsson Mobile Communications AB and Vodafone Group Plc.
“We expect revenues for this fiscal to be at around $400 million, of which telecom service providers will contribute 10-15% (around $40-50 million). We expect this to grow to around $200 million in the next couple of years and this acquisition will enable that,” said Sanjay Dhawan, the chief strategy officer at Aricent, which has seven research and development centres in India at New Delhi, Hyderabad, Bangalore and Chennai.
This is the first acquisition that Aricent, previously the software development and solutions business of Flextronics International Ltd, has done after it was acquired by Kohlberg Kravis Roberts & Co. and Sequoia Capital in September last year.
In May, the firm announced a research and development collaboration with Nokia Siemens Networks and established its third European software development centre near Farnborough in the UK.
Analysts say that with the telecom sector seeing enormous investments in technology, firms such as Aricent will have to try and deepen their relationships with clients through consulting.
“Companies such as IBM and Hewlett-Packard, offer their customers both products and consulting successfully. If a firm like Aricent can go into a space which offers its customers both consulting and implementation of products, then it will only help them in forging stronger and deeper ties with their clients which will reflect in better business,” says Romal Shetty, director for telecom risk assessment services at audit firm KPMG.
Aricent says it plans to continue exploring acquisitions in consulting and product development. “Two areas that we will look at for acquisitions are companies which have a strong base in consulting for telecom operators and firms that offer communication application. A strategic fit in these two areas will be an ideal option,” Dhawan said.
Half of Aricent’s revenues come from Europe with about 35% from the US, with nearly 80% of its revenue from services. Aricent, which has seven R&D locations in India, has 80% of its workforce here.