IT companies are enhancing their engineering capabilities through acquisitions.

IT companies are acquiring engineering services firms to broaden their range of competencies and fend off competition from specialized engineering services companies backed by well-funded private equity firms.

Recent developments: On Monday, Cognizant announced the acquisition of the US-based engineering services firm Belcan for $1.3 billion, marking its largest acquisition in this segment and the biggest by an India-centric service provider.

Infosys, a key competitor, purchased the semiconductor design and embedded services provider InSemi for Rs 280 crore ($33 million) in January, and followed up with the acquisition of the German engineering research and development (ER&D) firm in-tech for $480 million in April. Last year, HCLTech acquired the Germany-based automotive engineering firm ASAP for $280 million.

Other companies such as Accenture, Capgemini, Tech Mahindra, Coforge, and smaller players like Happiest Minds and Xorient have also made recent acquisitions in the engineering services sector.

Expert insight: Sidhant Rastogi, president of technology services at Zinnov, stated, "Currently, from an acquisition standpoint, there are not many high-growth areas for IT firms, especially on a large scale. Therefore, the ER&D segment appears to be the primary growth area, particularly in the automotive, software & internet, and aerospace sectors."