Hexaware to Spend $50 Million to Acquire U.S.-Based Outsourcing Company

Hexaware Technologies Ltd., the Indian software developer backed by private equity firm General Atlantic LLC, is looking to purchase an outsourcing company in the U.S. in a push to add North American customers.

Hexaware aims to buy a company that offers business-process outsourcing or remote infrastructure management services in a cash acquisition worth $25 million to $50 million, Chairman Atul Nishar said in a phone interview yesterday.

The move would give Hexaware access to new customers in a market that’s set to lead a recovery in demand for information technology services this year. Larger competitor Tata Consultancy Services Ltd. reported record North America sales in October.

“Our main objective would be to scale up in terms of acquiring more clients, as well as competence,” Nishar said.

Hexaware has $100 million in cash, which it will use for the acquisition, he said.

The Mumbai-based company has added 10 to 12 new customers a quarter on average, Nishar said. Companies based in the U.S. account for 66 percent of Hexaware’s business, according to Bloomberg data.

Information technology spending by U.S. businesses and governments, which includes computer equipment purchases and IT outsourcing, may rise 6.2 percent this year to $889 billion, contributing more than half of global demand, according to a Dec. 14 estimate from Forrester Research Inc.

U.S. Spending

Worldwide IT spending by businesses and governments will grow 7 percent this year to $1.7 trillion, according to an Oct. 15 report from Cambridge, Massachusetts-based Forrester. Spending in the U.S. will outpace gross domestic product growth as companies make up for orders delayed from last year’s recession and replace outmoded systems, the researcher said.

U.S. companies that delayed discretionary IT spending because of the recession are reaching a point where they can’t delay any longer, Nishar said. At the same time, the economic slowdown increased their emphasis on cost-cutting, boosting demand for outsourcing, he said.

“The growth rate is very good at the moment in the U.S.,” Nishar said.

Hexaware’s board of directors will meet Jan. 11 to consider an issue of bonus shares and an interim dividend, the company said in a statement yesterday to the Bombay Stock Exchange.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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