India apart, they are reportedly acquiring companies
in other key regions to improve their global footprint. Japan's IT market is over $100 billion in size. "Japanese IT services
firms have been traditionally focused on their domestic market, globally the second largest. Currently, only around 35 per cent of their revenue comes from outside," said Pareekh Jain, founder of Pareekh Consulting. "However, with the increasing global footprint of their domestic (in Japan) clients, these IT firms
now have an ambition to go global, with strong presence in India."
The European peers of Japan's IT majors have done quite a few acquisitions in India to build a strong offshore delivery presence. Starting from French firm Capgemini's acquisition of iGate in 2015 for $4 billion to the more recent buying out of engineering services firm Aricent by Altran Technologies at a $2 billion valuation, European firms have been active in Indian M&A (mergers and acquisitions) space. Sources said Mindtree and NIIT Technologies were among the entities that have been evaluated by NEC
and NTT Data, among others, for possible acquisition.
There have also been earlier such occasions. For instance, NEC
had made a strong attempt to acquire HP’s stake in Mphasis
in 2016, finally losing to private equity major Blackstone. However, even in 2013, it had shown intent on a bigger Indian play, when it bought a 49 per cent share of NEC
Technologies. Last week, the company said it would acquire Danish IT services
firm KMD Holding for $1.2 billion, testimony to its growing global ambition. Similarly, NTT Data's acquisition in 2016 of Dell Services for $3.1 billion enabled it to have a substantial presence in India. The company had also acquired a 55 per cent stake in Atom Technologies, a payments services firm owned by Mumbai-based 63 Moons Technologies, for $9 million in December last year.
are known for excellence in products, rather than on consultant-based delivery. These firms are now looking at a global market, riding on these technical solutions, and trying to build up the services business," said Sanjoy Sen, doctoral research scholar at Aston Business School, UK.
He said, too, that new technology areas like the Internet of Things could be a melting pot for both software and hardware services, which these Japanese firms could leverage.
However, not all sector experts are so sure about Japanese firms trying to emerge as global players with a strong Indian presence. "Offshoring penetration is around 3 per cent in Japan, which is minuscule. Factors like lack of executive push, slow decision making, complex ownership structure and cultural differences seem major barriers to offshoring," said Sudin Apte, research director at Offshore Insights.