Oracle, one of the world's ERP biggies, is in talks to buy out the Bangalore-based India Services Centre of Hexaware Technologies, a provider of IT and process outsourcing services.
It may be recalled that Hexaware had set up the development centre in 2003, in partnership with PeopleSoft to concentrate on development, implementation and support of PeopleSoft Enterprise Solutions for customers worldwide.
The contract with PeopleSoft for the centre was worked on a Build-Operate-Transfer (BOT) model, whereby PeopleSoft could obtain the development centre from Hexaware whenever it so wished.
Following the PeopleSoft merger with Oracle, the latter company now exercises those rights over Hexaware and according to sources close to the companies, is keen on taking over the development centre.
According to sources close to the deal, Oracle had a closed door meeting with some of the senior Hexaware executives on the prospects for the transfer less than two weeks ago.
The meeting was initiated to understand if there was any antagonism towards a takeover by Oracle. Sources say that Oracle found almost no opposition to the idea and therefore will look to acquire Hexaware within the next three months.
When contacted, Hexaware's founder and chairman, Atul Nishar, affirmed that the centre had a BOT deal with PeopleSoft and the deal has been transferred to Oracle.
He also said that meetings between Oracle and Hexaware happened on a regular basis to review the latter's performance but denied any meeting between the two companies had occurred to discuss a possible takeover.
Sources continue that the move by Oracle to take over the centre is driven by the need to reduce duplication of work in India. This will mean that some people in the mid-management levels in the present centre will be rendered redundant following the takeover. When contacted, Oracle maintained they could not comment on the subject.
Hexaware Technologies, which has its corporate base in Mumbai, recorded revenues of close to $121 million in 2004 and had given guidance of a growth of 40 per cent in 2005.
It had also predicted net profit growth of 80 per cent in 2005 to reach $25.2 million. Hexaware derives around 21 per cent of its total revenues from its PeopleSoft practice.
