M&A in IT space remains lackluster: IDC
Mergers and acquisitions activities in the IT space are expected to be on a lower pitch this fiscal as companies adopt a cautious approach in view of the uncertain domestic and global economic environment, according to global data aggregator firm IDC.
"This year is going to be relatively slow for merger and acquisitions in the IT space. Every one is in a cautious mood because of the Eurozone crisis. Caution is the watch word," IDC (International Data Corporation) India country manager Jaideep Mehta told PTI in Mumbai on the sidelines of a conference.
The companies like new IT bellwether TCS may go for one or two buyouts in the space, he said, adding however "I doubt it is going to be a hugely active year from the M&A perspective."
"However, what we have started seeing more and more is alliances with equity participation or indeed complete buyouts as companies move into new markets," he said.
On the positive side, Mehta said, for many domestic companies, the frontier market is Latin America now. But queries from the African market beyond South Africa as well as some of the fringe countries in the Asia Pacific region like Vietnam are also increasing significantly.
Currently the domestic IT market is no doubt going through a slow down, he said, adding, "what we have seen from the last quarter is that some of the segments have slowed down, while some segments continue to grow."
There is a lull in the market to some extent but from a mid-to-long term perspective, IDC forecast is double digits growth, pretty much across all categories, he said.
"The domestic market last year was USD 37 billion in IT spending as per the IDC, and when we look at double-digits growth, five to six years from now it would be USD 60-70 billion. Every one is looking to get a piece of this pie," Mehta said.