After a deep lull, the Indian IT industry is buzzing with talk of mergers & acquisitions. The writing on the wall is clear: consolidation in the industry is good and much-needed. The pecking order of the country?s top IT companies has not changed much in the last decade. The reason is simple: there are such huge gaps between the revenue figures of these companies that most of them have been safe at their respective spots for years now.

But the consolidation drive that almost started with the acquisition of India?s erstwhile fourth-largest software company?Satyam Computer Services (now Mahindra Satyam) by the sixth-largest?Tech Mahindra?promises a great deal of shake-out. Consider this: the difference between revenues of India?s third-largest (Wipro IT business), fourth (HCL Technologies) and fifth-largest (Tech Mahindra) software firms, is stark. At Rs 19,166 crore, Wipro?s revenues are more than double of what HCL Tech reported (Rs 10,229 crore) for the last financial year. And the latter?s revenues are more than double of what Tech Mahindra clocked (Rs 4,464.7 crore) in FY 2008-09. Of course, the merger with Satyam (whenever it happens) will surely catapult TechM closer to HCL Tech, if not above it, in the pecking order.

Consider the next in the row, Patni Computer Services, the difference between revenues of Patni and TechM is over Rs 1,300 crore. As reported by FE, the company is in advanced talks with L&T Infotech for a buy-out. L&T Infotech, which is at the eleventh spot currently with revenues of Rs 1,975 crore, has been struggling to climb up the ladder. If the deal goes through, the duo will usurp TechM to grab the fifth spot. Even global IT giants from Japan, Europe and the US, which want to up their India presence, are keenly looking at mid and small-tier Indian IT companies. That?s not all, many private equity majors are also in talks to cash out their investments in BPO and IT firms. Several of them could be merged to form bigger entities that can fight competition better. Even several captives of big MNCs in India, who have found it difficult to sustain themselves during the downturn, are on the block.

?surabhi.a@expressindia.com