CSC takes over Covansys for $1.3b to ramp up its Indian operation

Interesting week for M&A. Week started with Merger of Barclays and ABN Amro and ending with the CSC acquisition of Covansys.looks like it’s the season of mergers and acquisitions. Day in day out the bigger IT companies are picking up small and growing companies and ramping up their operations in India..Last year EDS had acquired majority stake in Mphasis and added some 11,000 India-based employees to their total head count. In February, 06, Capgemini sealed a $1.25-billion deal for Kanbay, adding about 6,000 India staffers. And now it’s CSC taking over Covansys. Is there anyone who can predict this fast growing M&A trend? One clear trend is that western IT services providers are increasingly aggressive about using M&A activity as a way to grow their resource bases in India, as intense competition in the country's labor market makes it increasingly difficult to recruit the right quantity and skills. In the last three years, CSC, EDS, Capgemini, IBM, Perot Systems, have all executed takeovers designed to boost offshore numbers, and more will follow.
Can we really see a merger of Oracle and SAP or Google and Microsoft in future? Well you never know bcoz IT industry is really unpredictable. Any Comments??

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i-flex Q3 net jumps 57% to Rs 91 cr

Banking software product and service provider i-flex Solutions has reported a 57.1% y-o-y rise in net profit in the third quarter(Q3) ended December 31, 2006, reports Our Bureau. Net profit was Rs 91.05 crore against Rs 57.95 crore for the comparable period in FY06. Revenues were placed at Rs 395.56 crore(Rs 297.47 crore) translating to a 32.97% rise. On a consolidated basis, i-flex has seen its net profit at Rs 111.2 crore against Rs 48.2 crore indicating a growth of 130.7% while revenues were Rs 557.4 crore indicating a y-o-y growth of 44%. The contribution from non-Citigroup clients stood at 52% of while the product revenues rose by an impressive 52% y-o-y. Citigroup holds a controlling stake in i-flex. “We are witnessing a significant mindset change in the global financial industry with greater attention to the state of ageing core systems. The combined Oracle/i-flex force is already making a difference in winning several top tier names as customers,” said Rajesh Hukku, CMD, i-flex. “i-flex’s continued growth and success is a result of its proven ability to deliver end-to-end solutions that meets the real business needs of financial institutions around the world, addressing their most pressing concerns and arming them with competitive advantage,” said Mr R Ravisankar, CEO, international operations and business development, i-flex. “As the company is expanding global operations, we are judiciously investing in creating a highly responsive infrastructure to support growth,” said Deepak Ghaisas, CEO, India operations & CFO, i-flex. Incidentally, the contribution from non-Citigroup was placed at 52% of the revenues while the product revenues rose by an impressive 52% y-o-y. Overall i-flex added 42 new customers for the group taking the total number of customers to 723. The third quarter saw a gross addition of 989 employees taking the total staff strength of the group to 8,546 indicating a 28% y-o-y. The acquisition of Mantas brought in 25 relationships for i-flex of which 16 were new-name customers.

i-flex ranked No. 12 in Forbes’ Asia’s best under billion list

India has emerged as the fourth biggest home to the best small companies in Asia with as many as 23 domestic firms finding place in a list of ‘200 best under-billion companies’ prepared by the Forbes magazine.In a development that marks growing recognition for India Inc — including small companies and not just the corporate giants and IT majors, India has been ranked ahead of countries like Japan, Hong Kong, Singapore, South Korea and Thailand.Three Indian firms — Great Eastern Shipping, Cipla and Sesa Goa have also managed to make to the top-25 of the “Asia’s 200 Best Under Billion” list published in the latest Asia edition of the business magazine.
Taiwan leads the tally with as many as 31 companies, followed by China with 30 entries and Australia with 27 companies on the list. The list include 11 companies each from Hong Kong, South Korea and Thailand, five from Indonesia, 19 each from Japan and Singapore, eight from Malaysia, three from Pakistan and one each from New Zealand and Sri Lanka.
Domestic shipping firm, GE Shipping has been ranked as the third most profitable entity on the list with a net income of 193 million dollars, followed by pharma major Cipla at 9th position with net income of 136 million dollars in the overall Asia list.
Sesa Goa has been ranked at 20th position with net income of 108 million dollar. Hong Kong-based China Merchants Holdings tops the list with a profit of 305 million dollar, followed by Australia’s Oil Search at second position with profit of 193 million dollars.
In terms of sales, Bharat Forge and Asian paints have been ranked at 12th and 13th position, followed by Cipla at the 14th rank across Asia.
Cipla also finds place in the magazine’s top-ten market value companies among all 200 firms mentioned in the list. It has been ranked at fourth position in this league with a market-value of 4.37 billion dollar, followed by i-flex solutions at 12th rank with a market value of 2.42 billion dollar, Bharat Forge and Dabur India at 24th and 25th positions respectively.
All the 23 Indian companies on the list include: Asian Paints, Bajaj Hindustan, Balkrishna Industries, Balrampur Chini Mills, Bharat Forge, Cadila Healthcare, Carborundum Universal, Cipla, Dabur India, Essel Propack, FDC India, GE Shipping, Grindwell Norton India, i-flex solutions, JB Chemicals & Pharmaceuticals India, Kirloskar Oil Engines, Maharashtra Seamless, Mastek, Pantaloon Retail, Punjab Tractors, Rolta India, Sesa Goa and Thermax.
The magazine said not all companies in Asia were feeding the region’s export machine with many in Japan and India selling products to their domestic markets.
Forbes cited the example of Mumbai-based retailer Pantaloon, which sells everything from cell phones to saris.
The list is considerably dominated by manufacturing companies. With Asian factories churning out so much of the world’s clothing, furniture and electronics, it’s no surprise that manufacturers have a strong presence on the list, the magazine said.

Merger of Capgemini & Kanbay: 23000 jobs in India

It could soon be raining jobs in India’s booming information technology sector, with the merger of French IT consultant, Capgemini and Kanbay International set to create over 23,000 new jobs in the next four years.
The deal to buy out Kanbay, an IT services company that is listed in the US but operates mostly out of India, would be unlike regular mergers and acquisitions as far as job layoffs are concerned.
In fact, Capgemini which has 6,000 employees at present hopes that the proposed merger would create a multinational behemoth with a workforce of about 35,000 employees in India by 2010.
The India head count of Capgemini, which on Thursday signed an agreement to acquire Nasdaq-listed Kanbay for about $1.25 billion, would increase from 6,000 to about 12,000 by the end of this year.
Currently, Kanbay has a workforce of over 5,000 in India, which represents a large chunk of its worldwide headcount of 6,900 employees.
No layoffs are expected following the merger, as the US as well as Indian operations of the two companies are spread across different cities. Moreover, Kanbay is more focused on financial services segment as compared to Capgemini, industry experts said.
The deal would also make Capgemini the largest MNC in the Indian IT services space in terms of Indian head count percentage ahead of giants like IBM, Accenture and Electronic Data Systems.
The company would become the third largest in terms of the total number of employees in the country after IBM (20,000) and Accenture (12,500), while excluding the employees in their BPO operations.

Great future for Banking customers of i-flex, IBM, Oracle from their alliance

This collaboration will combine IBM’s business & IT architectural leadership, Oracle’s banking-specific application solutions, and core banking and risk solutions from i-flex.


i-flex Solutions on Wednesday said that IBM, Oracle and the company will collaborate to provide joint banking customers with infrastructure, services, and support for enterprise applications, core banking, and risk management.The banking collaboration will combine the business and IT architectural leadership of IBM in banks, banking-specific application solutions from Oracle, and core banking and risk solutions from i-flex. This combination can help banks today, using proven, market-leading solutions in CRM, Core Transaction Processing, Risk, Analytics and Corporate Operations to translate a bank’s business strategies into execution in a timely and effective manner.The companies also announced the launch of Company’s powerful retail banking product, FLEXCUBE, on the IBM System z mainframe platform, delivering world-class performance, reliability and security banks require. Under the companies’ banking alliance, IBM plans to expand its services with Oracle and the Company to help ensure unparalleled integration and support for IBM platforms.”The collaboration represents a unique combination of leading companies to provide a comprehensive and total solution for top tier banks to migrate to the integrated banking applications and platforms of the future,” said R Ravisankar, CEO, International Operations and Business Development, of the Company. “IBM’s proven ability to manage complex systems integration, their experience i-flex applications and phased and evolutionary migration will ensure minimal disruption risk.”

Google acquires YouTube for $1.65 billion

YouTube went live in December 2005. Today, Google announced it bought the company for $1.65 billion in stock.
The deal, assembled at top speed, will be a stock-for-stock transaction. Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community.
YouTube will continue to be based in San Bruno, Calif., and all its employees will remain with the company. Closely-held YouTube claims more than 100 million videos are viewed daily on its site, making it the No. 2 video site on the Internet behind MySpace.
Word of the pending deal first surfaced late last week and was promptly lambasted by that shrinking violet Mark Cuban, who called the idea “crazy.”
Google CEO Eric Schmidt told a conference call that “what tipped us over was not the great business success but the vision they had for delivering content to users. It was the same vision in serving their users as Larry and David had in founding Google.”
Google expects to monetize the YouTube content through ad placement, but the details are still being worked out. Schmidt emphasized that Google’s answer to YouTube, Google Video, wasn’t going anywhere.
“Google Video doesn’t go away, ever. Google Video is a valuable part of the Google experience and will become even more integrated with Google in the future,” he said.
The deal is expected to close in the fourth quarter. Google General Counsel David Drummond said the purchase was all-stock instead of the usual cash deal to make it a tax-free transaction.
Analyst reaction was cautious.
“I find myself agreeing with Mark Cuban, but for different reasons,” said Joseph Laszlo, research director with JupiterKagan. “While YouTube has a large audience, they don’t have anything in their technology that’s unique.
Laszlo added, “Google has never bought audiences in the past, so buying YouTube would be a big break for them acting not like a tech company but a media company.”
Google paid an incredibly high price for a property that has yet to generate any appreciable profit, said Rob Enderle, principal analyst with The Enderle Group.
“Google often does things that appear insane and then makes them look brilliant in hindsight. This acquisition certainly hits on the insane part of that formula.”
The day had already started out on an upbeat note for YouTube, having signed deals with CBS, Universal Music Group and Sony BMG Music Entertainment. Google just signed a similar deal of its own to distribute music videos from Warner Music Group.
This comes on top of YouTube’s recent deal with NBC, which is helping avert a problem with copyright concerns.
YouTube lets its users upload pretty much anything and often has to deal with the issue of content after the material has been online.
It helps that the movie and television studios aren’t being as reactionary as the record labels, even though the majority share the same corporate parents.
“The three deals today shows YouTube is trying very hard to prove to media companies that it can be an asset, a helpful thing to them,” Laszlo said.
While music labels sued Napster, LimeWire and Kazaa out of existence, “the folks on the video side maybe sees more opportunity,” Laszlo added.
CBS will have a CBS channel on YouTube’s site, offering news, sports, Showtime and prime-time programming, starting this month. Universal will give YouTube viewers access to thousands of music videos, as will Sony. Sony will also let some songs be used in amateur video uploads on YouTube.

India is “No.1 Developer nation”, says Sadagopan (IIIT Professor,Bangalore)

The Professor urged developers to build programs that last long and admires that we are the number one developer nation
Never mind the argument whether India is a developing nation or a developed nation, the fact is that we are the number one developer nation, said Professor S Sadagopan of the International Institute of Information Technology here amidst rousing cheers from code-crunchers.
He was addressing around 700 software developers at the IBM Rational conference in Bangalore.
The theme of the conference this year is Software in Concert, and quite fittingly speakers at the conference were ushered on to the stage to the sound of rock guitar riffs.
Sadagopan urged developers to build programs that last long. Tracing the changes in the industry from old programming languages from Fortran and Pascal, to todays frameworks, he said that software has to evolve according to the changes in the IT world.

We are moving from products to productized services and from computers to appliances. The ability to program software for a gamut of devices has not happened yet, he said.
The Rational user conference also saw the launch of the latest version of the software in India. Developers got a sneak peek at what they could expect from the new release- support for global distributed development; SoA governance and regulatory and internal compliance features. Version 7 allows for componentization which means you can install optional installable features and specific components for targeted users, said Martin Nally, CTO, Rational Software.
He also gave a small preview of the features of the next release, which promises to offer a collaborative platform. As a precursor to Version 8, the company has announced what it calls its Jazz initiative, a collaborative platform that would leverage on Internet based technologies such as blogs, Wikis, RSS feeds and blogs, thus enabling real-time development platforms.
Rational plans to throw open core components of the work on Jazz to the developer community.