Bangalore/Hyderabad: A little over one-third of Perot Systems Corp.’s workforce of 23,000 is based in India, providing an Indian angle to the company’s acquisition by Dell Inc.
The acquisition will also likely affect plans of Indian information technology (IT) services firms such as Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd. These companies have suffered from a decline in business from banks and finance companies, and some of them were looking to tap emerging opportunities in the US healthcare and government sectors. Perot is strong in both areas, and its acquisition by Dell gives it the kind of heft that swings such deals, say analysts.
“The top three Indian IT vendors (TCS, Wipro, Infosys) currently get very little revenue from government and healthcare, excluding pharma. So, they will have to contend with another strong player when they want to increase revenues from those verticals,” said Sabyasachi Satpathy, director, Mindplex Consulting, a consulting and outsourcing advisory firm for the IT industry.
The fact that the merged entity is all-American could give it an edge in such deals, said another expert.
“It is definitely a powerful combination and cross-selling opportunities will be tremendous for the combined entity, especially in the healthcare and government verticals in the US, and could create a potential entry barrier for Indian IT services players trying to expand their presence in those verticals,” said Abhijeet Ranade, associate director at audit and consulting firm PricewaterhouseCoopers. “That the combination is a true blood American corporation will also give them an advantage over the Indian players.”
The Dell-Perot combine could also be a force to reckon with in the Indian market, especially in system integration deals, Satpathy added.
The slowdown in traditional markets such as the US has forced several large IT firms to look at opportunities in the domestic market.
System integration refers to a combination of hardware, software and consulting.
Of the 8,000 Perot employees here, around 40% are in businesses such as consulting and application services; the rest offer back-office services.
Perot’s India operations started as a joint venture with HCL Technologies Ltd.
Perot Systems was founded by H. Ross Perot, who in 1992 as an independent US presidential candidate railed against outsourcing and the “great sucking sound of jobs being moved elsewhere”. His son Ross Perot Jr is the chairman of the company in which the family still owns 30%.
Perot bought out HCL from the venture in 2003. Perot India currently has operations in Chennai, Noida, Bangalore Coimbatore and Pune. Globally, Perot gets at least 70% of its revenues from healthcare and government.
Perot’s global consulting and application services business is headquartered in Bangalore. The company has also been trying to crack the domestic IT market for some time. On Friday, it announced that it had won a Rs90 crore contract from Max Healthcare.
Another expert saw the deal as a missed opportunity for mid-sized or second-tier Indian IT firms.
“Some large tier-II players in India have definitely lost out on an opportunity as they could have acquired Perot for scale and easy access to the healthcare and government verticals in the US,” said Diptarup Chakraborti, principal research analyst with Gartner Inc.