TCS Chairman Natarajan Chandrasekaran has recently said that generative AI is going to make a huge impact on the future of the enterprise, which is not yet imagined. He added that there needs to be a substantially bigger investment in generative AI to create the needed impact.
IT firms in India are trying hard to cope up with the changing landscape of tech and increasing their workforce capabilities. Similarly, smaller IT firms are acquiring to strengthen their capabilities. The midsize firms are announcing acquisition in various segments ranging from startups, and consulting firms to engineering services, or the most common one right now is data and analytics companies. And the numbers are bigger than the larger IT firms.
The most recent one is the report of Happiest Minds acquiring US-based Aureus Tech Systems for a sum of $8.4 million. With a team of 150 employees, Aureus is a specialised digital product engineering firm based in AI. Happiest Minds aims to enhance its domain expertise in insurance and reinsurance, healthcare and life sciences, and its product and digital engineering services (PDES) business.
Interestingly, this is the third acquisition by Happiest Minds of FY25. In April, the company acquired PureSoftware Technologies for $94.5 million (INR 784 crore) and Macmillan Learning India for INR 4.5 crore.
All about increasing AI capabilities, expansion, and automation
The larger goal of these acquisitions seems to be headed in the direction of increasing automation and AI capabilities for their customers, while also expanding their footprint in the USA. For example, two of Carlyle Group companies - Hexaware Technologies and Quest Global also announced acquisition this week.
Hexaware Technologies announced the acquisition of Softcrylic, a leading data consulting firm headquartered in Minneapolis. Softcrylic is known for its exceptional expertise in data strategy and engineering. The company specialises in addressing intricate data challenges, ranging from data capture and validation to data modelling and activation.
With a wealth of experience across various marketing stacks, including Adobe, Google, and Salesforce, combined with their proficiency in engineering on Microsoft Azure and Amazon AWS, Softcrylic enables organisations to leverage their data effectively and obtain deeper insights through advanced data activation techniques.
Meanwhile, Quest Global acquired a majority stake in People Tech Group, a digital transformation company for Fortune 500 clients. This would enable Quest Global to better serve its customers in the OEMs in the automotive industry.
On similar lines, Coforge’s CEO Sudhir Singh has announced that the company is shelling out $220 million for acquiring a 54% stake in Cigniti Technologies. This is one of the biggest acquisitions for Coforge after the $73 million acquisition of SLK three years back. Singh said that this would help the company also expand to North America and help the company in three verticals - retail, hi-tech, and healthcare.
Apart from these, in April, ITC Info-tech entered into an agreement of buying %100 stake in Blazeclan Technologies, which is a cloud consulting company for INR 485 crore.
Revenues flowing in soon for IT with generative AI
In the last two quarters, Mphasis, GlobalLogic, and Sonata have also made acquisitions. Such small IT firms making acquisitions in an era where bigger IT firms are still under-delivering on the AI promises brings in hope as well as worry about what would turn out of such investments.
During the recent earnings call of the major IT giants, there was a lot of resistance about announcing the contribution of generative AI to the revenue. While TCS has $900 million generative AI projects in the pipeline, Infosys announced the acquisition of in-tech, which is a firm focused on the automotive industry. Wipro is also shifting its focus to lead generative AI in consulting.
Regardless of announcing the numbers, all of these companies are training their employees with generative AI skills, investing millions into it. While the financial year has just ended, by the next earnings, the IT firms might finally reveal the revenue they increase by investing in generative AI. For smaller firms, it is currently all about acquisition.
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