"Indian companies are sitting on a lot of cash, $500 million to $1 billion," said Ameet Nivsarkar, VP of research at Nasscom in an interview. Plus, "the valuation of Indian IT companies is high" compared with U.S. companies right now. "This is the right time" to do these large deals," he said.

Among the drivers for these deals is the united States' cap on H-1B visas, which isn't likely to be raised from the current ceiling of 65,000 anytime soon.

"It's definitely affecting Indian companies; they are not able to fulfill orders as much as they would like," Nivsarkar said. Indian companies have no problem getting American business, but the cap is "hampering the ability to deliver business," he said.

"Business is strong; it's the supply [of people who can come to the United States] that's a problem." while other Indian IT outsourcers could follow Wipro's recent example by acquiring American IT services firms in coming months or years, that strategy for U.S. expansion isn't as easy as it might seem, Nivsarkar said.

"Acquisitions in the IT services sector [between companies in India and the United States] tend to be more difficult than acquisitions in other industries, like manufacturing, because of the cultural differences," he said. So Nivsarkar predicts that most Indian companies eyeing acquisitions in the United States are probably more likely to tip-toe into this type of strategy. "They're likely to go slow," he said.

Source: 1

Tags: offshoring - outsourcing - india - m&a

Prashanth Rai