IBM is selling seven of its software services to an Indian company for $1.8bn, it was announced this Friday morning. The services IBM agreed (opens in new tab) to sell are Appscan for secure application development, BigFix for secure device management, Unica for marketing automation, Commerce for omni-channel eCommerce, Portal for digital experience, Notes & Domino for email and low-code rapid application development, and Connections for workstream collaboration.
The buyer is HCL Technologies and if the deal comes through, it will be the biggest acquisition an Indian company has ever done. For IBM, the benefit is clear – getting its hands on some cash, while it offloads a few services and focuses more on cloud.
For HCL, however, the benefit isn't that clear. Reuters says it will allow it to compete with bigger rivals such as TCS and Infosys easier. The company itself claims the acquisition will boost its scaling efforts in areas such as retail, financial services and transportation.
It will also add some $650m in revenue.
However, analysts are arguing that such an acquisition makes no sense (opens in new tab). “I don’t think it will help HCL on a long term basis ... this deal is a negative from HCL’s standpoint,” said Sudheer Guntupalli, a technology sector analyst with Ambit Capital in Mumbai.
“They already have IT partnerships for five of the seven products in the deal. So there would hardly be any incremental benefits on a qualitative basis,“ he added.
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