M&A Advisory: Brazilian Outsourcing firms begin stealing business from Indian players
By Tarry Singh at 5 January, 2010, 5:42 am
This could make the M&A activity for large European giants to also focus on the B of the BRIC as Indian firms begin to lose their customers steadily.
Leaving the Indian IT majors including TCS, Infosys and Wipro behind; companies like Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek are becoming attractive for top outsourcing customers such as GE, Citibank and several others, reports Economic Times.
At a time when Indian firms are planning to redefine their position as global services providers by growing their presence in the emerging markets of Latin America, Eastern Europe and Asia, they face stiff competition from these newer rivals. “For many customers who already have significant presence in offshore locations like India, it’s a risk diversification. Some customers having 70-80 percent of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche,” said Jimit Arora, Research Director of Everest Group.
CPM Braxis, which counts GE, ABN Amro and Whirlpool as its clients, reported revenues of around $567 million in 2008. One of the top four Brazilian banks, Bradesco, is also among the biggest customers for the company. While these new firms are not yet in the big league of mega, multi-year contracts, they are still able to gain business because of their niche and local market expertise. On an average, these companies are able to win contracts worth $2-5 million in annual contract value. “Many emerging companies we spoke with believe that they can become $1-billion company on their own. However, some admitted that they would be open to inorganic opportunities too,” said Arora.
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