In a bid to strengthen their presence in the region and tap into the nearshoring market, Indian outsourcers Tech Mahindra Ltd and its software wing Satyam Computer Services Ltd are planning on acquiring potential players in Latin America’s outsourcing market.
VP for Americas at Tech Mahindra, Vivek Kalra said in an online news report by the Wall Street Journal that the company is convinced that it has to make an acquisition in Latin American if it has to make a stronger presence in the area.
Latin America is an inexpensive outsourcing destination for developed markets. Additionally, the markets in the region are enjoying robust growth on the heels of a global recession. Hence, Latin America provides Indian outsourcers with opportunities for big business. The move from Mahindra and Satyam come amid a recovery in the Indian outsourcing industry stemming from cutbacks in outsourcing during the downturn in the global economy. Traditionally, outsourcing to India has been a dominant practice in the last ten years.
Mahindra has been slow to recover from the decrease in consumer spending, particularly as it operates exclusively in the telecom sector. The value of the planned takeovers is projected to be from $30million and $40 million. However, those figures could go as high as $150 million to $200 million, commented President of Satyam Computer, Atul Kunwar.
He added that the number of large-scale outsourcing firms is limited in Latin America and the market is highly fragmented. Kunwar said that there would be a clearer idea about the deals in 2011.
Reports say that the two firms are looking at takeovers in Brazil, Mexico, Argentina, Chile and Venezuela. Apart from that Tech Mahindra will establish a development center in America for the next fiscal year starting in April.