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Outsourcing deal structured as acquisition; to pay $28 m for 3 BPO assets

Our Bureau

Bangalore, July 25 In a $250-million seven-year outsourcing deal, structured as an acquisition, Infosys Technologies will take on board 1,400 employees of Royal Philips Electronics in three nations including India.

As part of the deal, Infosys BPO will provide finance and accounting (F&A) services and the processing of purchase orders to Philips.

Infosys will pay $28 million upfront to acquire the Philips’ BPO assets on ‘as is where is’ basis in Poland, Thailand and India, said the Chief Financial Officer, Mr V. Balakrishnan. Philips’ shared service centre at Lodz in Poland is 780 strong, while the company has some 400 people in Chennai and 175 in Bangkok.

“This deal will augment our capabilities in the finance and accounting (F&A) services and enhance our global footprint, especially in Europe. It will also help us to mine the Philips’ account further,” he said. Philips is an existing customer of Infosys for IT services. Mr Balakrishnan said the deal, expected to commence from October this year, will not have any impact on the operating margins as the Philips BPO margins are similar to that of Infosys BPO in the range of 21-22 per cent.

Further, the deal will enhance Infosys’ presence in Poland and Thailand, the new emerging low-cost destinations for BPO service providers. Infosys BPO, which has about 11,200 people in India, the Czech Republic, China and the Philippines, has seen significant growth of over 70 per cent in revenues. The F&A team accounts for some 50 per cent of Infosys’ BPO workforce. “The deal will further enhance our capabilities and make us one of the top five players in the F&A outsourcing space in the world,” said Mr Amitabh Chaudhry, CEO Infosys BPO, said.

Meanwhile, rating agency Standard & Poor’s has revised its outlook on Infosys to positive from stable.

More Stories on : Outsourcing | Mergers & Acquisitions | Infosys Technologies Ltd | New Business

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