Infy BPO to buy captive operations of clients

Infosys BPO, the back-office arm of India’s second-biggest software exporter Infosys, plans to acquire captive operations of customers, the company seeks to grow its share of the $80-billion global BPO market. Almost two years ago, Infosys BPO acquired back office operations of Philips, which assured around $250 million in revenues over the next few years. The acquisition helped Infosys gain entry into Poland and other European countries. “We are open to similar takeovers if the right deal comes through,” Infosys BPO CEO Amitabh Chaudhry said. “We are not looking at opening any new centres across the globe, but if such a deal comes along that requires them to have a facility, then we would go ahead.” Infosys BPO entered into a seven-year contract with Royal Philips Electronics of Netherlands to provide finance and accounting services and the processing of purchasing orders in a deal valued at $250 million. The Philips centres are turning profitable, Mr Chaudhry added.

Infosys Looking at Healthcare Buyouts

Infosys Technologies is focusing on smaller acquisitions in the healthcare space. "We are looking at small acquisitions, of the range of $100-200 million, as managing a large acquired entity would be tough in today's circumstances. We are looking at firms that offer services to healthcare companies," V Balakrishnan, chief financial officer (CFO) of Infosys, the country's second-largest IT services firm, told DNA. Infosys is also evaluating firms in the consulting space, where it lost out to HCL Tech in the race to acquire UK-based SAP consulting firm Axon Plc in August. "Acquisition in the consulting arena would generally be of large ticket sizes, upwards of $500 million. Moreover, for a firm of the size of Infosys, a lot of synergy would happen by having a bigger consulting firm with capabilities in multiple domains," the analyst said. Infosys has begun evaluating firms in France and Germany. Besides, Balakrishnan said the company is evaluating firms in Japan with an aim of getting a stronger foothold in the 'closed Japanese market'. The Japanese market for IT services is estimated at $108 billion. Amongst the top IT firms in India, Infosys have been the most conservative as far as acquisitions are concerned. In 2003, it acquired an Australian firm, Expert Information Technologies, for about $24 million. Four years later, it acquired Philips' global BPO operations. Infosys' cash reserve stood at about Rs 8,450 crore at the end of Q3 (Oct-Nov-Dec) 2008.

Infosys linked to buyout talks for UK's Sage

Infosys Technologies is in the thick of yet another European buy-out rumour --this time involving the UK-based Sage Group

British publications have reported that Sage's stock price on the London Stock Exchange went up on Tuesday on talk that Infosys, CapGemini orsoftware giant Microsoft may be interested in acquiring the company

The 13,000-strong Sage Group posted a turnover of £936 million during the last calendar year. It is estimated to have a market capitalisation of over £3 billion

source: timesofindia

Infy, Wipro chase same target for the first time

India’s tech posterboys and cross-town rivals Infosys Technologies and Wipro have shown interest in buying out the US-based high-end analytics company MarketRx. The indicative valuation of MarketRx is seen between $150 million and $160 million (Rs 615-650 crore), sources said.

This is probably the first time the Bangalore-headquartered Infosys and Wipro are seen chasing the same company for a possible acquisition. MatrixRx’s $160-million valuation is five times its revenue, the sources added. It is believed that the promoter expectation is “slightly north of this valuation”.

It is learnt that four-five suitors have expressed interest in MarketRx after the company mandated William Blair & Company in the US and Avendus in India to explore options, which could lead to a possible sellout. “The promoters are exploring various options regarding the future and will take an appropriate decision. The process is on,” said a source familiar with the developments.

For software services biggies like Wipro and Infosys, the acquisition will give a headstart in the analytics segment of the knowledge process outsourcing (KPO) segment, as it takes considerable time to build one’s practice organically in this business.

Industry observers said analytics services bring in higher revenue per employee compared to conventional IT services. The rates of analytics services range between $30 and $60 per hour while some high-skilled statistical modeling processes attract up to $150 per hour.

Wipro has been focusing on inorganic growth, with its now famous string of pearls strategy. Infosys, on the other hand, is getting aggressive on the M&A front. A target like MarketRx provides the BPO arms of both Wipro and Infosys a platform to get into transformational business deals.

Unconfirmed reports suggested that BPO major WNS could be also in the fray, but Gurgaon-based company is unlikely to join the race. Early this year, WNS acquired another analytics firm Marketics for $65 million, valuing it almost 10 times its annual revenue.

MarketRx was started in 2000. It has over 350 employees spread across the US, Europe and India. Its list of investors includes the US-based venture fund Sequoia Capital. The India operations were started with the Gurgoan centre in 2003 and support the US teams on collaborative projects besides servicing European and Asia-Pacific clients. MarketRx has more than 75 small and big pharma, biotechnology and medical devices companies as its clients.

Third-party analytics is growing steadily in India with more players entering the space, but currently it being dominated by captive units of MNCs, especially the financial powerhouses.

(Source: Economic Times)

Internal mail circulated in CapGemini

Capgemini bid media 'speculation': Infosys

Infosys Technologies, India's second-biggest software-maker, dismissed as "speculation" media reports on Friday that it will bid for Paris-based consultancy Capgemini, a firm with more than three times its annual sales.

Bangalore-based Infosys will use cash reserves amounting to Rs 62 billion ($ 1.5 bn) to fund the takeover bid for Capgemini, the Times of India reported, citing industry sources and people close to the matter.

Infosys will be able to reinforce its business in Europe by buying Capgemini; it will help build key relationships for its IT business. Still, Capgemini may be "too big" for Infosys to buy.The European consultancy had $ 10.35 billion in annual sales last year, compared with Infosys' $ 3.1 billion. But Capgemini made half the profit logged by Infosys and commanded less than half its market value of $ 27 billion dollars. The planned takeover of Capgemini is in line with a declared policy "to strike at the right target at the right time and the right place," The Times of India quoted sources close to the matter as saying.

The report comes less than three months after Infosys shuffled key management positions, promoting chief executive Nandan Nilekani to chairman and setting him free from day-to-day operations to map growth strategies. Chief operating officer Kris Gopalakrishnan was named chief executive. The company, a pioneer of the outsourcing boom in India's software industry, is preparing for greater competition amid rising wages and a strengthening rupee that is denting export earnings.

(source: Economic Times)