Economic Times: December, 2015
Mumbai: French technology firm Altran's India unit is looking at more acquisitions in the country as it chases faster growth in engineering services. It had earlier this year bought out SiConTech, a Bengaluru-based company that designs semiconductor chips.
Engineering services are expected to grow faster than the rest of the IT industry, albeit from a smaller base, sparking demand for mergers and acquisitions.
According to IT industry lobby Nasscom, engineering and research and development services are expected to grow 1315 per cent in the current fiscal, faster than the 12-14 per cent growth projected for the entire IT industry.
"The sector is poised for a historic change. Non-core engineering is beginning to be outsourced and moved offshore. It's going to be the beginning of very explosive growth," Sanjay Kumar, CEO and MD of Altran India told ET.
The company expects to go in for a few more buyouts to take advantage of this growth.
"There will be more deals. To prepare for this growth, you will have to make acquisitions because in engineering servi ces you can't just hire a bunch of freshers and put them on projects," said Kumar.
The company plans to increase its headcount to 5,000 in the next few years from about 1,700 at present, said Kumar. The future deals will be with companies with a headcount roughly equal to Altran India's, he said.
The engineering services sector has witnessed more than ten acquisitions this year as private equity firms and stra tegic players are looking to boost their exposure to the market.
India-listed Cyient and privately-held Quest have made two acquisitions each, while tech Mahindra bought Italian engineering designer Pininfarina to boost its engineering services division this month. Harman and Luxsoft have also made acquisitions this year.
Altran India also expects growth from the nuclear and defence deals being signed by the government.
"We expect to get business as these deals get signed because in some parts of nuclear, such as spent fuel disposal, we have the only experts in the country ," said Sanjay Kumar.