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Indian IT companies may not venture into new areas, says Nomura
Moneylife Digital Team 17 July 2013
Investments in new themes including social, mobile, analytics and cloud (SMAC) are likely to be from multinational IT companies, concludes Nomura Equity Research
 
Near-term focus in the information technology (IT) sector in Nomura’s view is likely to remain more towards traditional spend areas across Indian IT companies aimed at geographical expansion and greater depth in industry solutions, rather than emerging areas of spend where MNCs (multi-national corporations) are focusing on.
 
Emerging spend areas like digital marketing, mobile, analytics and cloud are buzzwords we hear often from Indian IT, but the focus of their acquisitions has predominantly been in traditional spend areas (75% of acquisitions in these spaces). This, in Nomura’s view, could be because of greater focus on competency building (through adding service lines or industry capabilities) or on geographical expansion in continental Europe (France/Germany). On the contrary, the focus of acquisitions for MNCs has been more towards emerging spend areas (70% of acquisitions). 
 
Investments in new themes including social, mobile, analytics and cloud (SMAC) are likely to be from multinational IT companies, concludes Nomura Equity Research.
 
The forecast for major Indian IT companies is given in the table below:
 
 
The historical data for acquisitions in the IT sector is shown in the table below: (acquisitions by Indian companies are smaller).
 
If we were to go into the nature of acquisitions by Indian IT companies, one would notice that acquisitions have been focussed on industry solutions, geography expansion or to augment consulting capabilities. This is shown in the table below:
 
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