Inaugural MW IT Index® (India Edition) Despite Challenges Ahead, Strong Opportunities for Indian IT Services Industry martinwolf M&A Advisors has published the inaugural MW IT Index® (India Edition), tracking the enterprise value of 36 Indian IT Services and Business Process Outsourcing (BPO) companies traded in the U.S. (NYSE and NASDAQ) and Indian (BSE) stock markets. In addition to the India edition, the firm publishes a U.S. edition and China edition (available on our website). martinwolf began publishing the Index in 2005, and now each version is used both internally and by industry leaders to analyze the state of the international IT industry. All three editions of the Index begin on January 1, 2008, with a value of 1000. Valuation Declines Starting in 2011 The Indian IT Services industry has become a significant force in the global economy during the past two decades, boosted by India's GDP growth and industry expansion. While India's IT companies remain profitable (spanning from January 1, 2011, through June 30, 2012) Tier 1 company valuations CAGR dropped to -15.6% and Tier 2 company valuations CAGR dropped to -24.9%.  These valuation declines mean different things for each type of company, but the one impact in common is that they have reached the end of relatively easy paths to growth. For Tier 1 companies, going forward it will not be enough for them to continue making acquisitions that simply move them up the value chain in general terms or establish a presence in new geographic markets. Instead, they will need to focus on completing very large acquisitions that significantly add to their skill sets, establishing deeper domain experience and developing or acquiring IP of significant value. Tier 1 companies can look to Accenture and IBM as role models for this necessary transformation . India's Tier 2 IT companies face the increasingly difficult challenge of figuring out how to grow fast enough to stay relevant. Even though they have encountered good P&L performance recently, with India's GDP growth slowing, and industry contracting, it is not translating to increased enterprise value. Outlook for the Indian IT Services Sector Still Remains Strong We believe that despite challenges facing the industry, the sector remains well-poised to succeed for the next three to five years driven by the aggressive growth strategies of Indian IT leaders and the strong potential for cross-border M&A growth. While the outlook is strong, India IT companies can no longer rely on the country's market forces alone to increase value. As a result, we expect India IT companies to increasingly look to cross-border deals to grow and build enterprise value. To view the entire report, please click here. For more information about our firm, contact Matthew Putzulu at mputzulu@martinwolf.com, or see www.martinwolf.com. | 
