The Y2K Blessing: The Scare That Redefined Indian IT
The whole world feared a catastrophe that day. The fears proved unwarranted. Rather, it proved a blessing in disguise as India's fledgling IT industry's technical capabilities successfully helped companies across the world beat the Y2K bug.
"Y2K was a defining moment. It was an inflection point for the Indian IT industry as it helped in establishing the industry's strong credentials, demonstrating its ability to scale up operations with quality and execute against deadlines," says R. Chandrasekaran, President and Managing Director, Global Delivery, Cognizant. It also helped IT companies expand their customer base across industries, opening up opportunities for an array of application-led services.
Y2K clearly jump-started the IT industry's growth. Its exports have since jumped by 12 times to $47 billion. Infosys, Wipro, Tata Consultancy Services and Cognizant have grown to become global players—proving that "Made in India" also stands for quality.
Tata Tea had attempted to buy the Tetley Group from Allied Domecq in 1995. But at that time, lack of financing prevented the acquisition and Tetley was snapped up by Schroders Private Equity Fund. Tata Tea did not give up. It kept working on innovative funding options and when Schroders began looking for a buyer in 1999, Tata Tea was ready with a leveraged buyout model to fund the acquisition.
Tata's Acquisition of Tetley: Started India Inc.'s Big-ticket Global Buys
Tata Tea's buyout of Tetley Tea, UK, for $431.3 million on February 27, 2000, was by far the largest cross-border acquisition of an international brand by India Inc. then and also the first instance of an Indian company resorting to a leveraged buyout to acquire an entity which was twice its size. It was also a case study in perseverance.
"In a way it was a business model innovation. A funding model practised elsewhere was picked up and fitted into the Indian context in a manner that offered the least risk," says R. Gopalakrishnan, Executive Director, Tata Sons, citing stiff foreign exchange regulations that the country had then.
This deal set the trend of other companies buying assets abroad. Aditya Birla Group's flagship company Hindalco took over Novelis Inc.—the world's leading producer of aluminium rolled products, for $6.2 billion. Suzlon bought German wind power company REpower for $1.7 billion, to name a few. The Tata Group itself did bigger deals: Tata Steel acquired Corus for $14.2 billion and Tata Motors bagged Jaguar-Land Rover (JLR) for $2.3 billion.