With iGate scripting a blockbuster buy in Patni, the company is close to reaching the billion dollar league in the Indian information technology space. The two companies will have combined revenues of $941 million and a headcount of 24,834 employees as on September 30, 2010. iGATE expects the transaction to be accretive by 2012 on a cash earnings per share basis.
The combined company will serve companies across verticals including Banking & Financial Services, Insurance, Manufacturing, Retail, and Media & Entertainment.
“The client set is complementary between the companies. The advantage of the deal is that we can cross-sell to these clients,” said Phaneesh Murthy, CEO of iGate Corporation. The deal gives iGate an opportunity to play in larger deals, more verticals and also enhance win ratio based on selling combined strengths.
According to an IT analyst with a brokerage house, who did not wish to be quoted, the deal shows the necessity for mid-tier firms to consolidate. It is a question of survival now as top tier firms have become stronger. And, the gap has increased between top tier and smaller firms. Besides, the mid-tier firms are neither specialist nor generalist like the top players. So, such deals are likely to see a surge in the Indian IT services space.
Patni Computer Systems has 16,556 employees, 282 customers, 22 global delivery centers, and offices in 30 locations worldwide, and reported revenues of $689 million for the 12 months ended September 30, 2010. iGATE has 8,278 employees, 82 customers, seven global delivery centers, and offices in 16 countries, with revenues of $252 million for the 12 months ended September 30, 2010.
“It has been our stated intent to scale revenues, customers, and expand our vertical capability. We believe the threshold of a billion dollar revenue will facilitate faster adoption of our iTOPS for Business Outcomes model. We also believe that the combination will help customers get better service, access to more service lines and deeper pools of expertise,” said Phaneesh Murthy, CEO of iGate Corporation, in a release.
Patni had cash and cash equivalents of $317.8 million (Rs 1,416 crore) as of September, 30, 2010.