There was a time when Indian software firms considered themselves made if they got orders from the US. When they were thrilled to supply cut-price programmers to US firms. Time was.
Indian software firms are now eyeing the US for different reasons. Sure, it still remains their main market, but increasingly it's becoming the place to go public, and to buy companies.
Flush with funds from fixing year 2000 problems all over the world, Indian firms are lining up to offer shares on US stock exchanges and to use the capital generated to buy stakes in US software companies.
The first signs of this became app-arent four months ago, when Infosys Technologies, long a darling of the Bombay Stock Exchange, became the first Indian company to offer shares on the Nasdaq stock exchange.
Its shares traded at $US34 initially, but it has already seen its price touch $121. Now it's looking for US firms to acquire and is considering starting a US software development centre.
A number of top Indian software companies are choosing this path for growth, and it's easy to see why. As revenue from year 2000 services slows down and the world moves toward e-commerce, India's software companies need to be close to the action. Another factor is that growth from leveraging India's cost advantage - a programmer in India costs three to five times less than in the US - can take these companies only so far.
"Large Indian software firms now have annual revenues of $US100 million to $200 million. To grow to $500 million and beyond, they need a US presence and a global presence," said an IT analyst at a large Dutch bank, who asked not to be identified.
Dewang Mehta, president of India's apex software industry organisation, the National Association of Software and Service Companies (Nasscom), said things have come full circle. "First, Indian firms would bring work home from the US or send people there. Now, they feel the need to be in the US to benefit from a rapidly changing environment," he said.
Nasscom estimates that over the next 12 to 18 months, about 10 Indian software companies are expected to offer shares on the US stock exchanges and then acquire companies in the US. Some of these companies have already gone public in India, while others are looking to launch an initial public offering (IPO) in the US.
The prime candidates to offer their stock in the US, according to industry analysts, are software makers HCL Technologies, Pentafour Software and Exports, Silverline Industries, Datamatics, Tata Infotech, Mastek and units of Wipro and Tata Consultancy Services.
These companies have generated revenue mainly from year 2000 work and maintenance of legacy systems, and are now moving into customising applications for large services firms and trying to develop their own products.
Another leading software and services company, NIIT, is reversing the cycle. The firm has arranged a $US100 million line of credit and has short-listed 20 companies from which it will choose acquisition targets.
Once it completes the acquisitions, it will probably offer shares in either itself or the acquired company in the US.