Merger with ITC Infotech to help in big deals: Happiest Minds CEO

Combined entity will bring together digital engineering, cybersecurity and AI capabilities with strengths in SAP, enterprise applications and Industry 4.0 offerings

Happiest Minds Technologies said its merger with ITC Infotech will help the combined entity target larger deals and focus on broader capabilities at a time artificial intelligence (AI) is upending the services industry and there is an increased focus on outcomes and vendor consolidation. 

While Happiest Minds is strong in digital engineering, cybersecurity, AI and data, ITC Infotech has its strengths in areas such as SAP, enterprise applications, industry 4.0 and other end-to-end offerings that bode well for large deals. 

“I do expect we'll see a little bit more of this where there are synergies to be had, and that will strengthen the emerged entities' ability to play in the market,” said Happiest Minds co-chairman and Chief Executive Officer (CEO) Joseph Anantharaju in a media briefing, when asked if more such mergers are likely to happen as the IT industry goes through a prolonged slump of lacklustre revenue. 

 

“As far as Happiest Minds is concerned, a few of the areas where we've actually left quite a bit of money on the table, there have been quite a few teams where we've helped with some of the digital capabilities or building out their digital infrastructure. The minute it came to enterprise application or an ERP system or SAP, customers would go with some other alternative,” he added. 

Happiest Minds is merging with ITC Infotech in a ₹1,330 crore deal with ITC Infotech being the promoter of the merged company with about 73.4 per cent stake. 

“While both platforms had grown reasonably well in the last 5 years, these firms continue to face pressure due to changing macro-economic conditions, vendor consolidation and AI led disruption. This merger now provides a reasonably sized tech services platform that can compete more aggressively in the global markets,” said Pravin Bhadada, managing director and CEO of management consulting firm Neovay Global. 

Indian services companies have been on an acquisition spree over the last one year as revenue growth has slowed and acquisitions become a viable route to show some steady growth to investors. TCS, Infosys, HCLTech, Coforge and Persistent have been some of the major companies that have mopped up smaller counterparts. 

Happiest Minds Managing Director Venkatraman Narayanan said the investments are needed to build capabilities in some areas. “Services companies will have to do more of solution or product platform. And for that you need scale, market reach, and should be able to absorb it over a higher level of revenue. So all of this would drive the market in that direction.” Both the executives said they will remain with the merged company.