India’s IT titans are strategically expanding their footprint in the BFSI sectors.
The digital revolution and a growing demand for tech solutions have put the Banking, Financial Services and Insurance (BFSI) sector squarely in the spotlight for many Indian IT firms. As this sector embraces advanced technologies like generative AI, Indian IT companies are seizing these opportunities through strategic acquisitions to enhance their technological capabilities and broaden their service offerings.
In this article, we’ll explore some standout acquisitions by Indian IT companies in the BFSI sector and the benefits they’ve delivered.
Recent notable acquisitions by Indian IT companies
Infosys
Infosys, a leading force in India’s IT sector, has made several strategic acquisitions to bolster its BFSI capabilities. A prime example is its 2019 acquisition of Stater, a Netherlands-based mortgage service provider for EUR127.5 million. This move was designed to enhance Infosys’s presence in the European financial services market. Stater brought to Infosys a robust portfolio in end-to-end mortgage administration services, marking a significant step in strengthening its niche market foothold.
In another bold move in 2020, Infosys acquired GuideVision, a prominent ServiceNow (an American cloud computing platform) partner in Europe. This EUR30 million deal was aimed to uplift Infosys’s cloud-based services for BFSI clients and expand their capabilities in enterprise service management. This includes strengthening their Cobalt portfolio—a set of services, solutions and platforms for enterprises to accelerate their cloud journey—and reaffirming commitment to the growing ServiceNow ecosystem.
Wipro
Wipro has been active in acquiring companies to intensify its BFSI offerings. One significant acquisition was the US$1.45 billion purchase of Capco, a global management and technology consultancy, in March 2021. Capco specializes in providing digital, consulting and technology services to the BFSI sector.
Further, Wipro acquired Encore Theme Technologies in 2020, a leader in providing Software as a Service (SaaS) and cloud solutions, to strengthen its capabilities in the fast-growing SaaS market. It would allow Wipro to provide more flexible, scalable and cost-effective solutions to its BFSI clients—particularly as demand for cloud-based services grows. Using cloud technology, businesses can store and retrieve data easily, boost revenue, acquire more customer insights and monetize enterprise data assets more effectively.
Tech Mahindra
Tech Mahindra, another major player in the Indian IT sector, has also made some significant inroads through acquisitions. In 2020, it acquired Seattle-based Zen3 Infosolutions, an AI and machine learning solutions company, for US$64 million. This acquisition was specifically targeted at integrating advanced AI capabilities into Tech Mahindra’s offerings, especially for the BFSI sector.
Moreover, in 2021, Tech Mahindra bought Perigord Asset Holdings Limited, a global leader in providing consulting and digital transformation services, particularly in the life sciences sector. This acquisition is part of Tech Mahindra’s strategy to expand its consulting and digital transformation services.
Market benefits of strategic acquisitions
Expanding and improving service offerings
Strategic acquisitions have empowered Indian IT companies to significantly expand their spectrum of BFSI-related services. Infosys’s acquisition of Stater and GuideVision, for example, has allowed it to offer comprehensive mortgage administration services and integrated cloud-based service management solutions—areas previously beyond its standard offerings. Similarly, Wipro’s purchase of Capco and Encore Theme Technologies has expanded its capabilities in consulting, digital transformation and cloud and SaaS solutions.
Strategic acquisitions have led to notable improvements in existing solutions. The purchase of Zen3 Infosolutions, for instance, introduced advanced AI and machine learning technologies into its repertoire, allowing Tech Mahindra to develop more sophisticated and effective solutions for the BFSI sector.
These strategic moves collectively underscore how Indian IT firms are using acquisitions to not only expand but also refine their service offerings, thereby ensuring they remain competitive and relevant in the rapidly evolving BFSI landscape.
Geographical expansion and market penetration
By acquiring companies with a strong presence in specific regions, Indian IT firms have been able to penetrate new markets and establish a ready-made client base without starting from scratch. For example, Infosys’s acquisition of Stater solidified its foothold in the European market, while Wipro’s purchase of Capco extended its reach across the Americas and Europe. This geographical diversification mitigates dependency on any single market and opens up new revenue streams.
Acquiring specialized firms also allows Indian IT companies to deepen market penetration and attract new clients. For instance, Wipro’s acquisition of Capco provided access to an extensive client base of global banks and financial institutions, further solidifying its status as a major player in the BFSI sector.
Conclusion
Strategic acquisitions are a key tactic for Indian IT companies aiming to enlarge their BFSI footprint. By acquiring companies with complementary capabilities and market presence, these IT giants are fueling growth and securing an edge in an increasingly competitive market.
Looking forward, industry experts are optimistic. They predict a spike in deal activity for Indian IT companies within the BFSI vertical, spurred by increased tech spending as economic conditions in Western markets stabilize.
However, there’s a word of caution: the higher tech budgets from clients might not translate directly into gains for these service providers. Trends like insourcing and stiff competition from major cloud service providers could dilute these benefits, potentially slowing the growth momentum for Indian IT firms in the BFSI domain.
Also read:
- Key Factors for a Successful Merger And Acquisition
- Four Steps to Master the Art of Negotiation
- Decoding the Hard-To-Swallow Pill in the Business World: What Is a Poison Pill Strategy?
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