Outsourcing Pioneer Patni Gets $915 Million Takeover Bid

Patni Computer Systems, the Indian-American IT services company that pioneered the offshore outsourcing phenomenon, is expected to be purchased by private equity firms in a deal said to be worth nearly $1 billion.

According to several media reports in the United States and India, Apax Partners and iGate have been negotiating to purchase Patni, which was founded near the Massachusetts Institute of Technology campus in Cambridge, Mass., by Narendra Patni and his wife, Poonam.

The Hindustan Times reported that a source with direct knowledge of the deal said the acquisition was valued at about $915 million.

A competing acquisition team made up of the Carlyle Group, Advent International, and Akansa Capital had also bid for Patni, which was said to have been for sale for several months.

The husband-and-wife team founded their offshore outsourcing company in 1972 after Narendra Patri finished studies at MIT. Their first office, a two-bedroom apartment in a three-family dwelling near the MIT campus, has grown into a 15,000-employee IT services firm with offices all over the world. It also fired up a robust offshore IT services outsourcing industry led by several Indian firms.

According to the Hindustan Times, the Apax-iGate partnership would likely obtain a $500 million loan to fund the acquisition of Patni. General Atlantic, which provided some early venture funding for Patni, is reported to be selling its 17% stake in Patni.

The offshore outsourcing phenomenon has not been without controversy as many U.S. lawmakers, unions, and professional organizations have complained about the loss of U.S. jobs to foreign software specialists. Offshore outsourcing has grown into a mature and financially healthy business since Patni began its operations in the early 1970s.