EDS's sale: a lost opportunity for India tech

Posted by: Manjeet Krpalani on May 14, 2008

So EDS finally gave itself over to the best suitor. Congratulations, Maseltov, Mubarak. On May 13 Hewlett Packard, the large and thriving tech global major, bought EDS for $12.6 billion. It’s a smart move for both EDS and HP. For HP, it’s huge: the company is no longer a distance behind IBM - it’s a close second to Big Blue in the business.
Alas, what a lost opportunity for Indian companies. If only one of India’s top four IT services majors had bought EDS. It would have created an international services major out of India, and perhaps changed the business in an even more creative way. But it was not to be.
It wasn’t always that way. For years, rumours swirled that Infosys, or TCS or Wipro would buy EDS, which was struggling until recently. But the rumours always eventually died. Why?
Because Indian services players are too unambitious, too content to be the big fish in a small pond. They’ve all made acquisitions, sure, but tiny ones. Nothing that will really put them to the test, show the world their mettle, put their business model under some pressure - perhaps to emerge stronger and better. Buying EDS would have catapulted them into the global big league.
But clearly, Indian services firms are too conservative. They’re too focused on quarterly profits (customers have been complaining), they don’t want their 25% profits to shrink to the global adult’s 10%, they don’t want Wall Street to fall out of love with them.
They also won’t want to give up control from the corner office in Bangalore, and let another CEO run the show from California or London or Paris. They lack the inner confidence to grow larger than their founders.
Hopefully the EDS-HP deal will be a wake-up call for them.

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