The IT giant, Infosys is planning to acquire It and back-office services wings of European companies. The back office and technology services of some European companies are on the outsourcing market, looking to cut costs of production and maintenance. With the bottle neck on the United States market, Infosys and several other Indian companies have now set their sights on the lucrative European market.
The deals that Infosys is looking to close could give the company anywhere between 40- 250 million dollar worth business. The business deal will be spread over 3 to five years. Buying out business processes is a long task, riddled with hurdles at every stage. Although buying out the business process translates into cost cutting for the parent company, the employees can be adversely affected. Infosys is looking to reduce employee impact by rebadging (hiring) all the current employees.
The rebadging of employees is a move that is meant to ingratiate the European market and convince them of the stark benefits of relying on outsourcing. The current deal in progress is however, not Infosys’ only European conquest. A Switzerland based consulting company called Lodestone was purchased for a whooping price of rupees 2,000 crores.
Similar deals were executed in 2007 when the finance and accounts processing center of Royal Philips was bought for 28 million dollars. The deal bought 250 million dollars’ worth of technological contracts to Infosys.
These large scale buyouts are held to be more promising and better for both parties involved as they are more permanent. The deals are profitable to the service provider and the seller sees immediate profits and cost cuts.
Such large scale buying in order to achieve the technology and back office deals forces one to think if the future of outsourcing has moved into the realm of million dollar company buy-out deals. Is it then more lucrative to buy-out the entire operation rather than offer services for a short term contract? The small scale outsourcing companies seem to be left in the lurch in the face the face of million dollar deals.