Although the heading used may not be appropriate, but still this is how it might sound for global IT outsourcing industry in the near future. Both MphasiS and Kanbay were ants in the world of outsourcing and I guess it was unnatural death for them, simply because two elephants EDS and Cap Gemini were clashing for those crucial outsourcing dollars spent by big banks and insurance companies in North American market.
Every CIO survey this year has pointed out that “Offshoring” will be a crucial component of outsourcing world. For companies who do not have “India Strategy” it would have been a big drawback when trying to attract CIO’s Dollars. 2 of the top 5 IT Outsourcing companies Viz., EDS and Cap Gemini did not have credible offshore presence and they in different ways have ramped up their India presence. EDS picked up predominantly BPO firm MphasiS focusing on BFSI, Hitech, Healthcare and Telecom verticals and Cap Gemini picked up Kanbay a pure play IT services companies focusing on BFSI, Manufacturing, Life sciences and Telecom verticals.
What about other global firms who do not have substantial offshore presence? There are only two ways of creating this. First is straightforward way of setting up the office in India and then start hiring the people. But before they hit the number of 10K or more it will easily three or more years. Second is to acquire India based service providers.
Given the current valuations, India based providers can be brought at 2.5 to 3 times their annual earnings and it is not surprising that there are quite a few companies which are very attractive from Domain skills and expertise perspective. Some of the companies which I think will cease to exist in the market in few years are as follows
Syntel, Hexaware, L&T Infotech, NIIT Technologies, Polaris, App Labs, Mindtree and Igate
Among the BPO firms who are still pure play companies better watch out, they are up for grabs as well. Among them I suspect are the following companies which will cease to exist.
Intelenet, EXL Service Holdings and 24/7 Customer
