Today in Tech : Rise of mid-caps, M&As in online travel space, Infosys, Lawyers in tech

Rise of midcaps: what next? At the height of financial crisis, the general feeling was that mid-cap IT companies will have a tough time compared to top-tier companies. Three years down, some of them seem to have fared well – growing faster than the market. The main reason has to do with math – they have a lower revenue base. But, Mint points to another reason: disaggregation of large deals. It’s riding on a trend, it suggests. Between 2002 and 2011, the number of midium deals ($25-99 million) has tripled.

I also see another possible trend starting soon: top managers from large companies shifting to mid-caps as CEOs. There aren’t  many examples now – I can only think of Infosys BPO’s COO moving to a mortgage process outsourcing company called ISGN  - but from what I gather from those in the industry, I won’t be surprised if there are more. Such moves have worked in the past. Earlier, Arup Gupta had moved from TCS to Polaris at a very crucial juncture for the company. When Phaneesh Murthy moved to iGate, it was a small struggling firm. Last year it bought Patni.

M&As in online travel space
A few days back, Yatra, an online travel agency, hit the headlines after it bought Travelguru, its fourth acquisition in 18 months. Today Business Standard reports that we will see more action in this space. Makemytrip, Expedia and Cox &Kings are all looking to expand their services / reach through acquisitions. It quotes Vikram Malhi, country head, Expedia India as saying, “Start-ups will think about exiting the market and the big players will want to grow faster by acquiring companies.”

Part of the growth will also be driven by the need to get into adjacent areas such as hotel / holiday booking services -  inefficiencies-ridden segments which can take some help from technology.

But the most interesting aspect of travel booking was the one I heard from Natesh Mani,  who heads Commercial & Consumer Business at Sify Technologies. He runs Sify's Mylife, a network that includes brick and mortar outlets. He said, of the over one million transactions that happens on mylife, 90% happen offline. Across India, out of total ecommerce transaction (most of which is travel & ticketing) about 70% happens through offline transaction from retail, he said.

That's the crucial difference between e-commerce in India and e-commerce in the west. At least, some of the M&As in this space will be driven by this difference.

Infosys: Everybody loves a big acquisition
Financial Express says that Deepak Padaki, Infosys’ mergers and acquisitions head, is busy these days, and that investors are hoping for a big acquisition soon. It’s easy to see why this subject keeps cropping up so often in the press. One, investors and analysts expect Infy’s growth to slow down. Today’s DNA has a report quoting a series of analyst reports saying that Infy will lower its guidance soon. Second, Infosys has a cash pile of $4 billion, a subject that was raised by some shareholders during its recent AGM. Their argument: if your growth is slow, either make some investments with a higher ROI, or return the cash to shareholders. Finally, top officials have been signalling inorganic growth. Infosys chairman KV Kamath recently told CNBC that Infosys management itself has articulated it very clearly during the course of the year that acquisition is a strategy that they will look at with all seriousness and I can say that that has happened,"

The real question is not whether it will make an acquisition or not, but whether it will make a billion dollar acquisition. All recent news reports seem to suggest that's what the  investors want. But that’s also a very risky route. The challenge for Infosys is not really in making a big acquisition, it's resisting the temptation to make a wrong acquisition.

Is the action shifting from labs to courts of law?
Here’s a screenshot of Reuter’s technology page when I logged in this morning.

Three of the five news items are about court cases. Something tells me it’s not a good sign at all.

Also of interest

• Google patent filing would identify faces in videos, spot the You in YouTube: Engadget
• Bill Gates: Microsoft Surface is 'the best of two worlds': The Verge
• Where Google Is Going Next: 5 Things You Need to Know: ReadWriteWeb

The thoughts and opinions shared here are of the author.