The Hindu : Business : PeopleSoft acquisition: impact on Indian vendors

Online edition of India's National Newspaper
Wednesday, Dec 15, 2004

Business

Business

PeopleSoft acquisition: impact on Indian vendors

By K. T. Jagannathan and Shanthi Kannan

CHENNAI, DEC. 14. The suspense is over. The worry may, however, persist. Yet, these Indian firms are putting up brave faces. One thing, however, is clear. The Enterprise Resource Planning (ERP) space in the globe will see a major metamorphosis with the PeopleSoft finally letting Oracle take over it.

What does this mega buy by Oracle portend to the Indian implementors of PeopleSoft solutions? Among the Indian firms, Hexaware and Covansys have major engagements with PeopleSoft. Polaris, too, has a relationship. Its vendor-relationship with PeopleSoft is an insignificant one, however. Covansys has over 575 people working in Chennai and Bangalore on PeopleSoft account. In Bangalore, it has a dedicated centre for PeopleSoft. Hexaware is a leading PeopleSoft service provider globally and over a third of its revenue comes from PeopleSoft business. Will their customer base grow or shrink in the light of this mega takeover? You need not wait till 2013 to know this.

Oracle has said that it will continue to support and update PeopleSoft applications until then. To be sure, Indian vendors can feel safe in the medium-term. As the Depression economist Lord J. M. Keynes said all are dead in the long run. The Chief Executive Officer of Polaris, Arun Jain, is convinced that the Indian firms are a smarter lot, and are capable of discovering newer and greener business.

The Chairman of Hexaware, Atul Nishar, is enthused by Oracle's commitment to support and update PeopleSoft applications until 2013. Mr.Nishar's confidence stems from the fact that the existing PeopleSoft installations across the world need to be maintained and serviced. Who else is better placed to do this than companies like Hexaware and Covansys who have acquired expertise in this? Oracle needs them for sure in the near-term. In the immediate future, the Indian firms need not worry, it appears. Mr. Nishar is hoping that Hexaware's ongoing relationship with Oracle will keep its position intact in the emerging scenario.

Larry Ellison, Oracle founder and CEO, has assured PeopleSoft's customers that applications such as PeopleSoft 8 and JD Edwards 5 will be supported and upgraded. Surely, the Indian vendors are willing to bet on Mr. Ellison's words.

The assurance should be read in the backdrop of reality. After all, PeopleSoft is enjoying a greater market share in the Human Resources Management Solution (HRM) space. This will be a temptation big enough for Oracle not to do anything that upsets the PeopleSoft customers. Notwithstanding the positive view of the Indian firms, the visibility is far less clear beyond the medium-term as Oracle and SAP set out to indulge in intense competition for a major pie in HRM space along with smaller players.

There is no surprise element in the takeover. Only the suspense was hanging for long. In the meantime, the Indian firms have re-adjusted their strategies to minimise adverse fallouts, if any.

What could be the long-term fallout of this acquisition? Well, industry watchers don't rule out the possibility of Oracle nudging PeopleSoft product users to move over to its own offerings. Oracle may not do anything overtly to change this course. Yet, it can do lot of things in a subtle way to enforce this shift among users. Perhaps, the takeover will have a different fallout. Observers feel that software professionals will now queue up to learn Oracle courses. Well, this takeover-induced churning in learning may see some earning and still others losing!

Last year, J.D. Edwards, another ERP company focused on providing solution to oil sector, was taken over by PeopleSoft. Ironically, PeopleSoft itself is now coming under the fold of Oracle. Will the ERP arena ultimately see only two big players in Oracle and SAP?

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