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Created by : Radhakrishna Marar, Business Analyst, Oracle  | 12 14 2009 13:56:26 +0000
Industry : IT ServicesFunctional Area : Strategy Execution(Strategy & Execution)
Activity:  284 views;  last activity : 07 06 2010 20:18:09 +0000

Despite establishing separate consulting divisions by many IT firms, but then till now one hasn't seen such impact created by any of the Indian tech firms and are yet to make any substantial progress. Today we are seeing deals happening when it comes to M&A's across the IT landscape worldwide as there was Perot & Dell, Sun & Oracle and many other deals that happened globally. But among Indian IT co's there was very less activity. Though Indian IT scenario looks good but then there is a dilemma whether they should build their own or buy? What do you think people, which is the better strategy Build or Buy? do share your views.

 
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Build from the start Vs Buy which is already established
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I think the premise itself is not right. We are talking of 2 different landscapes. The examples quoted in the questions are all product companies. When you buy a product company you expand market and get technology.

 Indian IT sector has no intellectual property as it is mostly staff augmentation service. There is no value add except cost reduction. So the only reason M&A would take place would be for geographic expansion. Current valuations are too high to seek geographic expansion. That is the reason Indian companies are on buying spree in US and UK.


By Ajay Joshi, President & CEO, ERP Consultants India  12 16 2009 02:10:43 +0000
 
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Build or buy it all depends upon company's business strategy. If there is great synergy between two companies then it is always good to buy the company however there is always some hurdles like cultural difference etc. when you buy any company.

We have a great example of Mahindra buying Satyam. If you remember there was a huge difference between Mahindra's price quote and other company's price quote. Mahindra just wanted to buy Satyam because they have analyzed and find great synergy between Mahindra & Satyam that provides good growth globally to Mahindra.

Buying a company is always depends upon synergy between two company's whether it is vertical or horizontal acquisition.  

I think build concept is not very popular particularly in IT industry. In IT industry changes take place very fast so building a new company from scratch is not a very good idea unless until your are bringing some new innovation just like Google did.

I can see huge M & A activity in IT SPACE in coming years.


By Deepak Agrawal, Consultant, Independent Consultant  12 14 2009 15:24:31 +0000
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Yeah Build From The Start Is Better That Buying Old One...Because Here One Can Established It As According To Its Own Need And Skills...

But Again Depends Upon Requirements And Time Being...


By raj singh sindal, Software Test Engineer, Rishabh Software Pvt. Ltd  | 12 14 2009 14:28:32 +0000
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I think yes there is a dilemma when it comes to Build vs Buy as a company when it wants to expand or venture different territory, it will always have this dilemma build it from the start like, from the grounds up or else buy someone who has experience in that field, and the decision depends on what exactly one wants, there are various skills which can be acquired, but some, should be built grounds up as the experience gained by the parent company will be always useful, so than going for the easy buying option it will be better to build it from the scratch.


By Radhakrishna Marar, Business Analyst, Oracle  | 12 14 2009 13:56:26 +0000
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M&A space is going to heat up in the coming months where negative cash flows are bound to have an impact for smaller companies operating in niche segments. This will result in companies with better cash flows to buy smaller firms to add or append to their key expertise areas. Buy and Build hybrid models gives companies the start off which is otherwise time consuming on the Build model


By Balaji Nagarajan, Sr Manager Marketing Services, Congruent Solutions Private Ltd  | 12 15 2009 11:10:50 +0000
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Though build from the start looks good option, but Buying which already which is established when it comes to IT consulting will do more good than building grounds up, as one can concentrate on other things, and leave it to the experts who have handled the work for many years and this also gives one an option of being diverse and cater many things than a single thing and that too one is taking so much time to do that. so Buying is the best option.


By Smita Dalvi, Sales/BD Manager, Hewlett-Packard  | 12 15 2009 07:55:59 +0000
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well, I am not not the industry person. i do observe the industry closely, and what i have noticed that buying something which is already established provides quicker returns. is therefore better than establishing the entire set-up yourself. not only the Sun-oracle, Mahindra-satyam, but also the polaris-lasersoft, telenor-unitech wireless, HP-eds.

I wonder if i can use the example of a buying a fully-furnished house or a plot and then build up your own house on it.


By Akanksha Prasad, Sr. correspondent  | 12 15 2009 04:57:34 +0000
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