Computer Sciences Corp.'s
Covansys provides information technology (IT) consulting services. Back in the early 1990s, this U.S.-based company started to move into India to capitalize on the lower wages and skilled workforce. It now has 6,400 employees in areas like Bangalore, Chennai, Vadodara, and Mumbai.
In the highly competitive IT sector, offshore strategies are becoming increasingly vital. Major players like Accenture
The deal also expands CSC's footprint into new industries. "A major focus for CSC has been on the insurance sector," said Michael Guilbault, senior analyst for Technology Business Research, when I interviewed him recently. "But with the acquisition, the company will get more exposure to financial services, retail, telecom, and high-tech sectors."
With its continued hiring in India and elsewhere, and impending expansion from the Covansys deal, the company's lower overall wage expenses should help CSC improve its profits. Integrating Covansys could take some time for CSC, but Foolish investors might see improved results later this year.
Further homegrown Foolishness:
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