Cognizant, Capgemini in race for Oracle's financial services business

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Cognizant, Capgemini in race for Oracle business unit
Information technology and consulting firms Cognizant technology and Capgemini are in a bid to acquire Oracle's financial services business unit in India. Oracle is being advised by Credit Suisse on this potential deal.

Oracle has approached only selective bidders for the transaction and will only close the deal if it is in line with its expectation. India's leading IT firms Wipro,HCL and L&T Infotech who were earlier interested in the deal rare are no longer in the race .

Oracle which earlier expected its services business to fetch $400-500 million has reportedly reduced its expectation. Its services business includes software services and business process outsourcing. In 2010-11, its total revenues from services and BPO were Rs 1,000 crore or $222million.

Oracle Financial Services Software (OFSS) has two main products under its portfolio which are the Oracle Flexcube which is a complete banking product suite for retail, consumer and corporate banking, investor and asset management. Its other product is services including BPO and financial consulting and other software services.

It acquired the services business in 2005 from I-flex for $909milion. Oracle's main area of strategic focus is products and information technology and not services. It is looking to strengthen its core business and thus it has decided to sell off its services business. Oracle was not inclined to sell its services business initially but in the last few years its focus on services area declined and its management was only interested in revenues from licensing . The company has done more than 50 acquisitions in the fields of database, technology and applications.

Oracle has seen high rate of attrition in its services business. A part of it was due to downsizing done by the company to improve efficiency and cut down on costs. The contribution of the services business to Oracle's total revenue has decreased from 50percent in August 2005 when it acquired it from I-flex to 25 percent in Q3 2011.

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