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December 19, 2008

Patni names CEO, confirms M&A policy

Will dip into cash reserves for acquisitions

By Jason Stamper

Patni Computer Systems Ltd today announced the appointment of Jeya Kumar as company CEO, and said it would be drawing on its $40m cash reserves as it looks to acquire captive offshore operations being divested by multinationals hard hit by the economic downturn.

“Our preference would be to acquire captives through strategic deals. Many large multinationals are now in trouble and would like to sell their captives,” chairman NK Patni told the Economic Times of India.

He was referring to news that Tata Consultancy Services had recently agreed a deal with US bank Citigroup for its captive unit in India. Similarly, UK insurer Aviva has also off-loaded certain parts of its captive outsource operations.

The incoming CEO has some 25 years experience, formerly as CEO of BPO vendor Mphasis and before that as a senior vice-president with Sun Microsystems.

He takes over from Loek van den Boog, who was appointed as executive director in April and who will now continue as a non-executive director on Patni’s board. Kumar will be starting in February.

Financial analysts remain cautious over the future fortunes of the 15,000-strong IT services company, citing increasing competition within the sector and a declining average growth rate for the Indian IT services industry in the coming few years of 7.8%.

The Mumbai-based vendor provides infrastructure management support, product engineering services, as well as business process outsourcing and customer interaction services out of its global network of delivery centres.

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