Offshore software and services provider NIIT Ltd has become the first Indian offshore firm to brave an acquisition in the European market, and has snapped up local German services provider AD Solutions AG.
Under the terms of the deal, New Delhi, India-based NIIT will acquire Monheim, Germany-based AD Solutions for $3m. NIIT will be taking on AD Solutions 75-strong workforce across its offices in Monheim, Stuttgart, Lucerne, Vienna and San Francisco, and will give the company additional skills in legacy migration services, as well as application consulting and outsourcing. According to reports, privately held AD Solutions made revenue of 10m euros ($10m) in full year 2001, although the company did not disclose profitability.
NIIT has proved the most acquisitive offshore developer during 2002, having acquired a total of four firms since the start of the year. Last month, NIIT snapped up US-based IT consulting firm Data Executives International for an undisclosed sum, expanding the company’s scope in the finance and insurance sectors in the US market.
Prior to this in April, NIIT made its first step into the US market through the acquisition of SAP services firm Osprey Systems, which employs 50 people and provides consulting, systems integration and hosting services around SAP tools, and is an accredited SAP services and channel partner. In January, NIIT acquired e-learning tools developer Click2learn’s custom development software business.
NIIT said that the latest deal of AD Solutions will enable it to make inroads into the German, Swiss and Austrian IT services markets, which it estimates is a $27bn market. Larger rivals such as Infosys Technologies, Wipro and TCS have so far been content to expand their sales forces and set up small development operations in Europe, however the tide may now be changing.
In another landmark takeover in the offshore software services sector, Wipro announced this week its intention to buy the global energy practice of American Management Systems Inc for $26m in cash, a deal that ranks as the first major acquisition in the US by a top-tier offshore player. The low market valuations of many Western services providers could well spark other Indian players to make similar strides.