India IT firm plans Gulf acquisitions

The Indian IT firm Tech Mahindra is considering acquisitions in the Middle East, as it looks to double its regional revenues and staff base.

A merger of Tech Mahindra and its subsidiary Mahindra Satyam, which was confirmed at the end of last month, is set to create India's fifth-largest software exporter.

The combined entity - worth US$2.4 billion (Dh8.81bn) in revenues - now plans to double its business in the Middle East region, said executives.

Hari Thalapalli, the chief marketing officer and head of human resources at Mahindra Satyam, said acquisitions were "definitely on the agenda" in the region.

"[It is] probably something that will happen more aggressively after the merger has completed in seven to nine months' time," he said.

"The Middle East market will probably be around energy and petrochemicals-related areas.

"We see that as an area where we can look at acquisitions," he added.

Mr Thalapalli said due diligence had not yet been initiated on any Middle East companies.

But he added partnerships with regional technology firms could also be on the agenda.

"As we start looking at scaling to the next level of growth, we are very clear that we will partner more and more with the local business in every country in the Middle East," he said.

Bobby Gupta, the vice president for the Middle East and North Africa at Mahindra Satyam, said the combined entity aimed to double its staff of 500, and revenue in the Middle East, over the next 12 months.

"We grew this region by 100 per cent over the last two years. And we expect the momentum to continue.

"It will come from markets like Saudi Arabia, Abu Dhabi and Qatar."

Mahindra Satyam specialises in software in areas such as cloud computing, mobile and network devices.

Tech Mahindra, which is part of the Mahindra Group, acquired a majority stake in Mahindra Satyam three years ago.

Mr Thalapalli said he did not expect redundancies following the formal merger announced last month.

Prior to its acquisition by Tech Mahindra, Satyam was involved in one of India's biggest accounting frauds, after its founder admitted its profits had been overstated and assets falsified.

Mr Thalapalli said the issues raised in the accounting scandal had mostly been resolved, although he said there were some outstanding legal issues.

"We have moved forward on that. The financial restatement has been done," he said.

"Most of the legal issues have been settled."