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Infosys takes over Philips' BPO units

The $28 million acquisition is the second in the company's history, report Venkatesh Ganesh & BR Srikanth.
Hindustan Times | By Venkatesh Ganesh & BR Srikanth
UPDATED ON JUL 26, 2007 04:12 AM IST

Infosys has piped global software major CapGemini and IBM to take over three captive BPO units of the Netherlands-based consumer electronics major Royal Philips Electronics for Rs 114.8 crore ($28 million).

The deal, which puts the company among the top five global players in the fastest-growing financial and accounting outsourcing segment, also includes a seven-year outsourcing contract from Royal Philips. Infosys will get "assured" revenues of Rs 1,025 crore to manage the finance and accounting functions of the Netherlands-based company, which is exiting non-core areas. The outsourcing units are located in Thailand, Poland and India. The Indian unit, in Bangalore, has 1,400 employees involved in administration, patent research and product development work for Philips globally.

Infosys, which has been staying away from acquisition-led growth, is finally taking the inorganic route to expand its footprint in some of the rapidly growing markets abroad. Said Infosys Managing Director S Gopalakrishnan: "We are scouting for acquisitions in 'all geographies' to widen the overseas footprint." There are rumours that Infosys is eyeing CapGemini as well. CapGemini, however, has denied the takeover rumours.

Infosys has taken a leaf out of the TCS book. TCS bought out the UK-based Pearl Group in 2005 and also bagged a 12-year contract, valued at Rs 3,810 crore (£486 million). Stock markets and credit rating agencies responded positively to the deal. The Infosys share price closed high at Rs 1,989 on the Bombay Stock Exchange. Analysts feel that the Royal Phillips deal could be a window to many other outsourcing contracts.

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