Ness Technologies, an Israel-based IT services provider, is looking at acquiring two companies in India in the area of OPD (outsourced product development) and financial services space by the end of next calendar.
Since its inception in 1999, Ness has so far made 21 acquisitions, including two in India. The Nasdaq-listed company entered the Indian market with the acquisition of Apar Infotech, a US-headquartered OPD firm with operations in Bangalore and Mumbai, for $78 million in 2003. In 2007 it had acquired Innova Solutions, a Hyderabad-based IT company focused on financial services, for $25 million.
“We are less interested in acquiring big revenues and are now focused on acquiring competencies to further penetrate into specific vertical markets. We are looking at buying companies with revenues of between $20 million and $50 million. Whether we expect these deals to wrap up by the next calendar year ... it could be much earlier or much longer than that as it is very difficult to predict buyout deals,” Sachi Gerlitz, president and chief executive of Ness, told Business Standard.
In the last two years, Ness had used debt to finance its inorganic growth plans. With the net debt at $40 million and about $60 million in cash on its books currently, the company is comfortable to fund its proposed buyouts, he added.
Ness Technologies employs 7,800 globally, of which about 41 per cent are spread across its Mumbai, Hyderabad and Bangalore centres, 35 per cent in Israel, 17 per cent in Europe and 7 per cent in North America.
Gerlitz said the company, which follows a January-to-December accounting year, ended 2008 with $608 million and 2009 with $512 million.
“Our 2009 revenues were impacted by the macro economic situation and currency translation, which started in the third quarter of 2008, predominantly in Europe. Though we report in dollars, two-thirds of our revenues are non-dollar. Our guidance for 2010 is between $575 million and $585 million. We had an acquisition (Gilon Business Insight) in the beginning of this year that is expected to contribute to a quarter of this growth,” he said.
Terming the company’s business as a stool with three legs – with 34 per cent of its revenues coming from North America, 28 per cent from Central Eastern Europe and 36 per cent from Israel, Gerlitz said the company was seeing significant growth from the US and moderate growth from the other two geographies this year.
Replying to a query on whether the company was looking at India as a revenue generator, Gerlitz said the domestic market was already crowded and was relatively of low-margin.
