Despite Rupee appreciation, inflation and fear of recession in the US, the three IT Majors of India – Infy, TCS and Wipro – have reported reasonable rise in their earnings. But, the scenario in the Indian IT Outsourcing arena does not look great at this point in time.
A thought on – what a merger between the 3 IT Majors – Infy, TCS, Wipro – can do to this grim situation…
- Increased Client base and opportunity to increase billing rates: Majority of IT outsourcing deals goes to one of these companies. A merger would increase the client base, leading to a monopoly-like situation. This will make these companies free to increase billing rates, without fear of competition
- Greater talent base: Many talented managers and engineers constitute these 3 companies. A combined talent base would mean – greater efficiency in project execution and easier interchange of resources across projects/companies
- Reduced Attrition: Employees from each of these 3 companies, often move between these companies. Making them a single entity might reduce attrition, though at a smaller rate
- Efficient Usage of Infrastructure: All these 3 companies have established offices, across the world. By appropriate planning, better utilization of infrastructure can be achieved
- Amplification of each company’s strengths: Infy has a better training team and infrastructure. TCS has a huge talented workforce and operations spanning many countries. Wipro, in the same way has its own strengths. By merging these entities, an amplification of each company’s strength, can be used towards the betterment of others
Though it is very unlikely to happen, I presume a merger would improve things on a longer run.