Infosys eyes acquisitions worth $700 million

Bangalore, October 30, 2011: Infosys, leader in software exports in India, has announced that it is searching for acquisitions worth $700 million. The announcement was made on Thursday, by Kris Gopalakrishnan, Executive Co-Chairman at Infosys. Infosys has been on the search for acquisitions in the health care and life sciences sector. It focuses on firms which have platforms or niches play in these markets.

Infosys was started by seven Indians in the year 1981 with a capital investment of 250. Today Infosys is the leader across the globe in the IT services industry with revenue of US $6.604 billion.

According to Kris Gopalakrishnan, they are planning to acquire a firm which is worth 10 per cent of their revenues. The revenue of Infosys is projected to be $7 billion and so the price of the acquisition will be $700 million.

He said that Infosys wants to grow their Pharma and health care sectors faster so that it will stimulate growth and also will fill their gaps.

The Indian IT industry is fed by companies which outsource processes to reduce cost. Majority of these companies are from the US and Europe. The debt crisis in Europe and the ongoing economic recession in the United States have led to decline in orders from these areas.

Gopalakrishnan says that the financial crisis in the Europe has impacted the business and growth in the IT sector. This has led to a decrease in the revenue growth in the current year, which has reduced to 17 to 19 per cent from 18 to 20 per cent. 

As the uncertainty in the business environment in Europe grows as a result of deepening financial crisis, more and more companies are staying away from signing new contracts.

Infosys as well as its Indian rival, Tata Consultancy services are facing tough competition from global players such as IBM and Accenture.

Infosys has already declared that they are targeting to increase their revenue share from European region to 40 per cent of its total sale by the end of 2014.

Head quartered in Bangalore, Infosys leads the $76 billion IT sector. The company grew very rapidly with the help of thousands of Indian engineers, by providing low cost services to overseas clients based in the United States and Europe.

Infosys observes China as a market with huge growth potential. The Chinese companies and multinationals from China to expand overseas are also trying to introduce outsourcing.

According to Rangarajan Vellamore, Chief executive of Infosys China, Chinese clients contributed about $80 million in revenue and Infosys expects it to grow at 30 per cent in the next year. He said that the automotive sector and the white goods manufacturing sector forms the majority of clients from China.  

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