When Indian outsourcing company HCL beat rival Infosys in the race to buy UK-based Axon for some £440 million last year, some commentators hailed the deal as the first of many "outbound" acquisitions of European and US IT services companies by their larger Indian counterparts.

So far, that's not happened. Recently, all the big M&A news in outsourcing sector seems to come from the US: Xerox buys ACS, Dell buys Perot.

Yesterday, Reuters India published a very interesting article, 'Indian outsourcers shy of blockbuster M&A', that suggests that this situation won't change any time soon. As the authors point out, India's near-$60 billion IT sector seems determined to focus on acquiring smaller niche companies, both at home and abroad, in order to tap into vertical industry opportunities in sectors such as utilities and healthcare.

As an alternative, they may opt to buy the local back-office operations of large foreign companies - just as Cognizant Technology did last week when it snapped up the Indian back-office unit of UBS for some $75 million.

So there's little chance of a big European firm like Atos Origin or Capgemini coming under Indian ownership in the near future. Infosys, which abandoned the Axon deal last year, has some $2.8 billion in cash - but CEO Kris Gopalakrishnan told Reuters that he's only looking to spend around 10% of annual revenues (around $400 million) on its next acquisition.

There are a number of very good reasons for Mr Gopalkrishnan and other CEOs who may be shopping around to hold back on their purchases - the major one being, of course, the current economic climate. But there are also the huge risks involved in integrating a large European headcount with an existing base of relatively low-cost staff to be considered. Differing business models and cultures will not sit together well without some considerable upheaval.

That said, Indian companies are eager to increase the value of the contracts they can offer companies in Europe and the US and to develop the kinds of high-level, consultative partnerships that the likes of Accenture and IBM enjoy with huge, multinational companies. In order to do so, they'll need to expand rapidly into new territories and also be able to attract (and retain) senior executives with experience in leading top-level strategic relationships. With that in mind, it will be extremely interesting to see how cash-rich Indian buyers proceed.