In the wake of news that Indian systems integrator Infosys Technologies plans to acquire a high-profile European integrator, consolidation among systems integration companies providing enterprise application implementation services is likely to accelerate, experts said.
That coming consolidation, however, won't significantly drive up integration services costs paid by manufacturing companies, in part because of continuing high levels of competition and the expected entrance of new suppliers from emerging low-cost countries.
Infosys' planned $753 million acquisition of U.K.-based SAP services provider Axon Group Plc, announced in late August, quickly stimulated a round of intensified merger and acquisition activity, particularly among Indian-based systems integrators. In September, Indian systems integrator HCL Technologies was believed to be considering a counter-bid for Axon, at a 15% premium over Infosys' offer. HCL declined to comment on the rumored bid.
At the same time, other Indian systems integrators vowed to step up their acquisition activities. Top executives of Wipro Ltd. and Satyam Computer Services - which has bought six small systems integration companies over the past three years - publicly said their companies would consider launching more and larger acquisitions. And Infosys CEO Senapathy Gopalakrishnan publicly said the proposed purchase of Axon won't be his company's last bid to expand operations in Europe through acquisition.