Chakkilam Infotech buys US firm for $2.4 mn

Chakkilam Infotech Limited, an independent software testing services company from Hyderabad, has acquired US-based Cigniti Inc in a $2.4-million (approximately Rs 12 crore) stock-swap deal. Texas-based Cigniti, which primarily offers consulting and testing services to clients in the US, had declared revenues of $18 million (Rs 88 crore) last year.

“The acquisition will help us expand our footprint in the US market and reach out to much larger enterprise clients in that geography,” CV Subramanyam, chairman and managing director of Chakkilam, told Business Standard.

Cigniti complements Chakkilam’s expertise in the areas like test consulting, test management, test automation and performance testing. The combined entity will have more than 600 resources globally and a revenue run rate of $22 million (Rs 108 crore). Chakkilam claims that this acquisition makes it the country's largest independent testing services company in terms of revenue.

“Software companies all over the world are looking to engage with testing labs offering the whole gamut of services. Joining forces with Chakkilam will enable us to leverage each other’s strength to better meet the needs of our industry partners and fulfil our vision to help companies improve the quality of software being delivered worldwide,” Sudhakar P, chief executive of Cigniti, stated in a press release on Monday.

According to Gartner and Nasscom, independent software testing is a niche market that is growing faster than the overall IT services market.

The recent 2011 Nasscom report on software testing forecasts independent testing services in India to grow to $13-15 billion by 2020 at a compound annual growth rate of over 20 per cent and expand India’s current 32 per cent share of the overall global outsourced testing services.

“Given the potential that the independent software testing space offers, we are looking at building our capabilities both through organic and inorganic means,” Subramanyam said, adding Chakkilam was expecting to double its revenues to $4 million (Rs 19.6 crore) by the end of this financial year.

Chakkilam Infotech’s scrip ended the trade at Rs 24.90 on the BSE, up 1.84 per cent, over the previous close of Rs 24.45.