Tata Consultancy Services (TCS) and Tech Mahindra have plans to acquire the Indian design services unit of Flextronics, reports the Economic Times.

The $31 billion electronic manufacturing services (EMS) company set up the design services unit in Bangalore as part of worldwide restructuring. The unit has about 250 high-skilled workers, which is believed to be the main attraction for the two companies eyeing the unit.

Flextronics had decided to shut down the unit, and has already sent notice to its employees. This has led to speculation about a potential bargain for any company planning to acquire it. It is believed that TCS or Tech Mahindra may benefit from the skill sets of the unit across their multiple business verticals. The unit would benefit the defence, aerospace and research and development services of TCS.

Engineering services outsourcing is a developing sector in India, and the process of building its base is time consuming. Flextronics plans to exit the business, and may prefer to sign a deal rather than close the unit. 

Flextronics, a Singapore-based company, set up base in India with acquisition of Deccanet, Future Software and Hughes Software. However, the company later sold its software services unit to private equity company Kohlberg Kravis Roberts for $900 million, even though it maintained certain stake and the design services separately. The company has a manufacturing unit in Bangalore and plans to set up another unit near Chennai. X