M&As went slow in 2009 but there are signs of accelerated activity in 2010. IT services accounts for over two-thirds of the deals in value and domestic deals are in favor over crossborder ones.

1. Analysis of Mergers & Acquisitions
in IT Services & BPO
M&As went slow in 2009 but there are signs of accelerated activity in 2010. IT services ac-
counts for over two-thirds of the deals in value and domestic deals are in favor over cross-
border ones.
by Ashwin Razdan
T He pace of mergers & acquisitions (M&A)
was significantly slower in 2009. However,
with the economic recovery getting ground-
ed in reality early this year, organizations rein-
stated their zest for inorganic growth. In the last
35
30
25
Domestic Deals
Cross-Border Deals
20
# of Deals
two months, deal size has crossed over US $30mn 15
as compared to the average deal size of below US 10
$20mn in the last quarter of 2009 and first quarter 5
of 2010. 0
The overall data for M&A includes software and Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10
services. In the last one year nearly 340 deals were
signed worth over US $18 bn. The number of deals
per month was within the range of 25-35. The peri- nearly 61% indulged in domestic deals over cross-
od witnessed three billion dollar deals; largest be- border ones, indicating that the buyers are still not
ing US $5.8 B acquisition of Sybase by SAP in May very open to deals outside of their geographies due
2010. The two others were US $3.9 B acquisition to remote management and regulatory concerns.
of Perot Systems by Dell, and US $1.8 bn acquisi-
tion of Omniture by Adobe in September 2009.
Segment-wise Deal Analysis
$7,000 45
Deal Value
# Deals 40
$6,000
35
BPO
Total Deal Value (US$mn)
$5,000 30
IT Services
# of Deals
$4,000 25
$3,000 20
IT Consulting
$5.8bn SAPSvbase 15
$2,000 $3.9bn Dell-Perot and
$1.8bn Adob-Omniture
10
$1,000
5
0
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10
54% of the deals have been in the IT services
space, followed by 32% in the BPO industry. Deals in
$35
these segments are yet to pick up and greater activity
Avg ExBn$Deals
Period Avg
$30
is expected to be seen in 2010.
Average Deal Value (US$mn)
$25
$20
US continues to be a predominant country in the
$15
M&A activity. Deals in the areas of virtualization in-
$10
cluding, SaaS and cloud computing, are being con-
$5
sidered. Offshore locations like India & China have
$0
started showing increased interest in client geogra-
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10
phy acquisitions, but the number of deals are still
significantly low.
18 GlobalServices www. globalservicesmedia.com GS100-2010