Are IT Companies Focused on Increasing Capacity or Enhancing Value?

BENGALURU: Indian IT companies are increasingly acquiring client technology units and specialized businesses to secure larger, long-term partnerships. This trend, reminiscent of past strategies, aims to enhance contract values as organic revenue growth slows and artificial intelligence reshapes technology spending. Acquisitions that introduce next-generation capabilities in areas like cloud and AI can command high valuations, while captive carve-outs often attract lower multiples.

TCS is acquiring Porsche’s technology subsidiary MHP for $373 million, part of a five-year strategic partnership valued at $1.4 billion. MHP reported revenue of approximately $865 million in 2025. Similarly, Wipro has agreed to purchase Singapore-based Olam Group’s digital arm for $375 million, with the total contract value expected to exceed $1 billion, including around $800 million in committed spending.

HCLTech has also entered the acquisition space, agreeing to pay $225 million for HPE’s Communications Technology Group. This deal will enhance HCLTech’s telecom business by providing intellectual property, engineering talent, and customer relationships. Infosys has acquired Danske Bank’s 1,400-person IT center in India, securing a contract worth $454 million.

Industry experts note that these acquisitions reflect a shift in strategy. Ramkumar Ramamoorthy, a partner at tech growth advisory firm Catalincs, highlighted that recent deals involving in-house technology arms of companies like Porsche and Olam may signal a trend where global companies divest non-core assets. This mirrors past acquisitions of captive arms from major firms such as Citigroup and UBS.

The strategy of acquiring captive units is not new. TCS previously bought Citigroup’s stake in Citigroup Global Services for $505 million in 2008, while Cognizant acquired UBS India Service Centre in 2009. Peter Bendor-Samuel, founder and chairman of the Everest Group, commented on Porsche’s restructuring amid competitive pressures, questioning the potential benefits for TCS from this partnership.

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