Dell to get bigger footprint in India with Perot buy

Dell’s acquisition of Perot Systems for $3.9 billion, say analysts, will give the former an enlarged footprint in India, as well as give both the companies a chance to diversify, while making Dell a services’ powerhouse, globally and in the country, too.

Perot Systems is relatively small — $2.7 billion in sales, whereas Dell is a much bigger, $54 billion company. Dell, in a statement, said this would mean a better positioning of the company. For, it can provide a broader range of IT services and solutions, extend the reach of Perot Systems’ capabilities and supply Dell computer systems to even more Perot Systems customers.

Dell’s service globally is largely centred on its (dwindling) hardware/infrastructure sales, while Perot Systems is a leader in infrastructure services and outsourcing. Dell needs to shore up its sagging revenues, while Perot acquires an enviable international client base.

Perot is not new to the Indian market. It first entered India in 1996 through a joint venture with HCL Technologies— HCL Perot Systems (HPS). The joint venture (JV) was formed with a combined capital investment of $4.5 million. For the first nine months of 2003, HPS reported $78.7 million revenue and $9.3 million net income. In 2003, due to some differences, the JV came to an end when Perot Systems bought HCL’s stake for $105 million.

Perot Systems, today, has close to 8,300 employees across six centres in India. The Bangalore, Noida and Pune centres cater to the application development and infrastructure services. Hyderabad, with around 80-100 people, offers engineering services. The company’s BPO operations are run from Chennai and Coimbatore and consists of over 4,000 people.

Dell has close to 12,000 people in India, spread across four segments, R&D, marketing, domestic sales and BPO. The company’s BPO centres are in four cities—Chandigarh, Hyderabad, Bangalore and Gurgaon.

“There will not be an immediate impact on India, as such deals take a lot of time to integrate. HP is a example. But from an India perspective, Perot was trying to get into the healthcare segment. It was trying to get into a much more niche segment than global players like IBM and Accenture that cater to all the verticals. Perot still does not have a huge footprint in India,” said Alok Shende, principal analyst, Ascentius Consulting.

Perot recently signed a Rs 90 crore, 10-year outsourcing deal with Max Healthcare. This agreement marked Perot Systems’ first full IT outsourcing contract in the Indian healthcare industry, as well as the company’s first India-based healthcare client.