Bangalore:
Infosys BPO, the back office subsidiary of Infosys, has acquired Australia-based sourcing and category management services firm Portland Group. The A$37-million all-cash deal is expected to be completed by early January 2012.
According to Infosys, which has often been criticised by analysts and industry watchers for not being aggressive on acquisitions despite sitting on almost $4 billion of cash, the deal will help it establish presence in the Australian market with more offerings in the value-added segment
“The deal will essentially enable us to have a reach into the Australian market. It will enhance our sourcing and procurement capabilities. Infosys’ focus has always been on value-added services and this will add to it,” Swamithan D, CEO and MD of Infosys BPO, told ET.
Portland Group has over 100 employees with a reported revenue of approximately A$31.3 million for the fiscal year ended June 30, 2011. “Portland Group has over 100 procurement specialists with domain expertise and some 40-odd clients. None of them is our clients as of now. The deal will certainly help us intensify our service offerings and take sourcing and procurement functions to a higher level,” he added.
The acquisition is expected to start contributing to Infosys revenue by next quarter. The country’s second-largest IT services firm is seeing a greater role for its BPO business as it transforms itself from an IT services firm to a business solutions firm. According to the company’s executive co-chairman, S Gopalakrishnan, BPO is now leading the sales in many of its new wins where earlier it would have been bundled along with IT services.
Infosys’ BPO business is set to hit the $500-million-mark in revenue this year. “For Infosys, only 7% of business comes from BPO services. But I see that as an opportunity. Traditionally you would have thought that BPO comes later.
But now BPO is leading the sale and everything else gets pooled to BPO,” Gopalakrishnan told ET in an interview last month. According to him, BPO is also gaining prominence as IT services firms move to platforms which have some amount of business processes embedded in them.
Since October, the company has added incentives to its technology sales team if they are able to sell the BPO business as well. So far Infosys’ technology sales team was only responsible for selling IT services.
The last acquisition that Infosys made was also in the BPO business. In 2009, it acquired the US-based McGamish Systems to expand its presence in the insurance and financial services sector. The company signed a $250-million deal with Royal Philips Electronics of the Netherlands and acquired three shared service centres located in India, Poland and Thailand from Philips in 2007.
Portland Group CEO Galvin Solsky said Infosys will provide Portland’s clients with a highly compelling proposition that does not currently exist in the Australian market. “It (the deal) will allow us to offer our clients a truly integrated and globally competitive solution to deliver procurement benefits in the most effective and efficient way possible,” he said in a press statement. Infosys closed down 0.25% at Rs 2,667.35 on the BSE on Tuesday.
source: http://www.articles.economictimes.indiatimes.com/ The Economic Times / Home> Tech> ITeS / ET Bureau / December 21st, 2011