EMC buy to make Dell stronger player in Indian market

Impact of merger on Indian staff might be minimal

Dell’s $67-billion deal to buy enterprise storage solutions provider EMC is also expected to help the tech major fast-track its growth in India, a market where its interest lies in the traditional personal computer as well as in the services segment. According to analysts, the combined entity could position itself as a formidable force against competitors by offering an array of services.

Analysts, however, added the company should have a clear-cut long-term and short-term goal to do well. “It depends on how they merge their existing product portfolio with EMC. EMC is a market leader and with this acquisition, Dell would be in a position to be leader in the enterprise storage segment,” said Santhosh Rao, principal research analyst at Gartner.

With the acquisition of EMC, Dell will be better equipped to take on IBM and HP, he added. Dell derives close to $2 billion in revenues from India.   According to Hitachi Data Systems the deal has not come as a surprise.

“The logic and strategy behind it are not much of a surprise. EMC has been facing a tremendous amount of pressure from its investors to give them a financial return. Industry dynamics such as mobile, cloud, big data and the internet of things (IoT) have changed the game for pure play IT organisations,” the firm said.  

“They’re struggling against new pressures, cloud being the most significant, while scrambling to become relevant among the massive opportunities around big data and IoT,” it added. Hitachi also said while the deal is not a done yet (it is expected to close in May-October 2016), it expects further consolidation, churn and turmoil amongst the pure-play IT organisations to better find a way to “stay relevant in an ever-changing landscape”.  According to HR experts, the Dell-EMC merger might not result in large-scale layoffs in India since HR cost in India is much cheaper.  

“Whenever there is an acquisition, cost cutting always takes place and that includes laying-off of staff. But in my sense, there will not be major impact (of this deal) in India since we are a low cost market,” said Kris Lakshmikanth, founder and chief executive of Headhunters. Dell has a workforce of 27,000 employees in India out of its 100,000-plus total staff strength globally. EMC has about 3,200 employees in India.

The merger of the two companies, which is expected to be completed by the second half of 2016, is likely to result in reduction in administrative costs by cutting staff strength in similar operation areas such as sales and marketing. “Even if a lay off happens in India, it would take place after year or so,” added Lakshmikanth