SemanticSpace looks to shop in the US

HYDERABAD, INDIA: The time is ripe for Indian companies to go shopping in the US, opine some analysts. Looking to make use of it is SemanticSpace, a software firm having its technology development center in Hyderabad.

The company is aiming to acquire New York-based JYACC, reported a business daily on Tuesday.

The company officials however, did not respond to an e-mail query regarding the deal. SemanticSpace, under the trademark Prolifics, provides solutions to various companies including IBM.

This could just be link between the companies as SemanticSpace is a business partner of IBM and JYACC has been an award-winning system integrator for IBM implementations.

SemanticSpace finished the acquisition of Arsin, a Silicon Valley SAP testing company early last year. It was rumored to have been scouting for more in the US.

“The valuations are good with the US slowdown due to subprime crisis,” said Kaustubh Dhavse, deputy director,ICT Practice, Frost & Sullivan, South Asia and Middle East.

“With companies struggling to increase their topline, acquisition in the US market will help maintain their pace of growth through increasing customers which they achieve through the clientele of the target company,” said Dhavse.

The customer list of the US company and its technical expertise are significant factors in such acquisitions, he added.

Acquisitions could also be driven by requirements of large clients. “If a company sees a customer worth $50 million then investing about $20 million in a buyout would definitely make sense to Indian IT companies.”

While the US slowdown may be making deal valuations attractive, this trend will not be limited to this economic cycle say analysts.

“If Indian companies need to achieve the reputation such as HP, IBM and the like then such steps need to be taken irrespective of the market conditions,” said Dhavase.

This will indicate the maturing of Indian IT firms, who started off as a cost advantage but now would grow due to operational excellence, he added.