It was a year that was filled with loads of action. What made
2006 special was that it celebrated 50 years of computing in India since the
arrival of the first digital computer at the Indian Statistical Institute-the
HEC-2M-in 1956. The IT industry was on a roll in 2006. Exports grew and so did
the domestic IT market. Outsourcing remained the central theme of the industry,
in both the offshore and domestic markets, and this translated into significant
growth for the Big Five of outsourcing in India. They grew by nearly 35 percent
to capture one-third of the industry. TCS crossed the $3 billion mark and inched
another step forward towards S Ramadorai's V-2010 target to be a part of the
global top 10 and reach $10 billion in revenue.
The year that went by saw Indian multinationals growing in
strength as they aggressively and strategically lapped up players from all over
the globe to drive growth, enter new domains, fill up existing lacunae in
service offerings and enter new geographies. Wipro was one of the most
aggressive in the M&A space making strategic acquisitions like that of
US-based cMango for $20 million. cMango is focused on offering business service
management (BSM) solutions that comprise services in business transformation,
ITIL consulting, service management solution architecture, implementation,
training and support services, expected to enhance Wipro's capabilities in the
BSM space, where it has a small presence. US-based Quantech Global,
Finland-based Saraware Oy and Portugal-based retail solutions company Enabler
followed. According to official reports released till October 2006, there were
43 outbound deals against 38 in calendar 2005.
outbound deals peaked, inbound deals grew at a steady pace with 13 deals
recorded till October 2006. The EDS-MphasiS BFL deal made the biggest news in
June when EDS acquired a majority stake in the Jerry Rao promoted IT services
company. The Oracle-i-flex deal was the other significant inbound deal that
happened, which in a way acknowledged i-flex's success with Flexcube.
The importance of the domestic market as well as the strategic
importance of India to tap into other Asian geographies was further reiterated
by visits from head honchos of some of the major global players. IBM's Sam
Palmisano's visit saw the analyst meet in Bangalore, it was also the first to
be held outside the US-a sure indication of the importance of India to IBM's
growth strategy. Henning Kagermann became the first SAP CEO to visit the
country, making his visit a fairly significant one, while EMC's Joe Tucci's
maiden Indian trip acknowledged EMC's meteoric rise in India in the last
couple of years.
The country reached a new high on the global outsourcing map
with Tech Mahindra landing India's first $1 billion contract from British
A Happening Year
A plethora of product launches happened across vendors and product segments
like storage, software, productivity solutions, systems and networking. The
much-awaited and much-hyped launch of Microsoft's X-Box finally took place in
September last year in Delhi. Microsoft also unveiled its path breaking Vista OS
for business and Office 2007.
The Indian soil also heard some big-ticket investments.
Chip-maker Intel announced a multi-year investment totaling over $1 billion,
including $800 million over the next five years for business expansion, and $250
million towards Intel's Capital Fund for investment in Indian technology
companies. Cisco announced a $1.1 billion investment focused on R&D, while
Microsoft's $1.7 billion investment covered R&D, education, governance and
productivity, and is spread over four years. Both Intel and SAP announced $1
billion investments each as well. Investments from domestic majors soared as
Indian IT companies expanded to other tier-two cities.
While the significance of India in the growth strategies of the
multinationals were further established by these mega-investments, some major
ones happened from VCs as well; in a space that promised to get right back into
a growth phase-dotcoms. Travel, matrimonial and job portals remained the
flavors of 2006 as investments poured in from all corners. Kleiner Perkins
Caufield and Byers (KPCB) announced its first investment in India with the
launch of Cleartrip.com. Pramod Haque's Norwest Venture Partners teamed up
with Reliance Capital and Television 18, the broadcaster of satellite television
channels like CNBC and IBN to form Yatra Online. Capital Partners, a
leading Mauritius-based Indian venture capital fund, announced its decision to
back Travelguru. KPCB and Bangalore-based Sherpalo has also invested an
undisclosed amount into Infoedge. People Interactive's Shaadi.com received an
$8 million investment from WestBridge Capital partners.
Amidst all the growth and exuberance, the industry lost two of
its captains-Arun Kumar of Flextronics and Nasscom's Sunil Mehta. A lesser
loss, and less significant as far as Infy's future fortunes are concerned, was
the official handover of the Infosys baton from NR Narayana Murthy to Nandan
All's well that ends well-and that is how we would like to
sum up 2006 and look forward to a better 2007.