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Infosys Consulting plans U.S. buy
By siliconindia
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Friday, 20 November 2009, 18:33 IST
Bangalore: As part of its inorganic growth initiatives in the U.S., Infosys Consulting, a strategic consulting arm of IT services giant Infosys Technologies, is planning to acquire a small consulting company with revenues in the $100-140 million range (
450-650 crore).
Market sources said that Infosys had been looking at a suitable acquisition target in the U.S. with consulting expertise in verticals like aerospace, retail, healthcare and financial services. "These are areas where the company has been targeting deals worth $20 million and above. Acquisitions in these verticals are integral to the company's plans to further penetrate the U.S. government and municipal sectors," the sources added.
However, Infosys did not respond to questions on the development. But, the sources added that to impart depth to its consulting portfolio, Fremont, California-based Infosys Consulting was in the process of hiring consultants with experience in handling clients from the oil and gas, financial services and government utilities sectors. "These consultants will be placed at Infosys Consulting's Houston, New York and Fremont offices. They are also looking to recruit consultants in the utilities space across locations, including their Mexico centre," sources said. They noted that the fresh recruitment by the company had also been necessitated by exits of key employees who had joined competitors like IBM and Accenture in recent months. A market analyst noted that the company had not been able to gain leverage on the pricing front with large clients.
"Pricing has been a point of contention for them in the key U.S. and European markets, where they are still not able to make the kind of impact they want to. Their average billing is in the $100-150 per hour range. On the other hand, competitors like Accenture and IBM have been extracting per hour billing rates of $200-250. Established players like McKinsey and Pricewaterhouse, which are audit firms in the top consulting bracket, command billing rates as high as $500-1,500. Obviously, Infosys is betting on inorganic ramp-ups as a quick way to close the odds," an analyst said.
According to Infosys' annual report for 2008-09, the company invested 22 crore in Infosys Consulting last year. Since the inception of its consulting arm in 2004, Infosys has invested 193 crore ($45 million) in the wholly-owned subsidiary, including 81 crore invested in 2008. During 2008-09, Infosys Consulting serviced 96 clients, and generated revenues of 287 crore with net loss of 59 crore, according to the annual report.
450-650 crore).
Market sources said that Infosys had been looking at a suitable acquisition target in the U.S. with consulting expertise in verticals like aerospace, retail, healthcare and financial services. "These are areas where the company has been targeting deals worth $20 million and above. Acquisitions in these verticals are integral to the company's plans to further penetrate the U.S. government and municipal sectors," the sources added.
However, Infosys did not respond to questions on the development. But, the sources added that to impart depth to its consulting portfolio, Fremont, California-based Infosys Consulting was in the process of hiring consultants with experience in handling clients from the oil and gas, financial services and government utilities sectors. "These consultants will be placed at Infosys Consulting's Houston, New York and Fremont offices. They are also looking to recruit consultants in the utilities space across locations, including their Mexico centre," sources said. They noted that the fresh recruitment by the company had also been necessitated by exits of key employees who had joined competitors like IBM and Accenture in recent months. A market analyst noted that the company had not been able to gain leverage on the pricing front with large clients.
"Pricing has been a point of contention for them in the key U.S. and European markets, where they are still not able to make the kind of impact they want to. Their average billing is in the $100-150 per hour range. On the other hand, competitors like Accenture and IBM have been extracting per hour billing rates of $200-250. Established players like McKinsey and Pricewaterhouse, which are audit firms in the top consulting bracket, command billing rates as high as $500-1,500. Obviously, Infosys is betting on inorganic ramp-ups as a quick way to close the odds," an analyst said.
According to Infosys' annual report for 2008-09, the company invested 22 crore in Infosys Consulting last year. Since the inception of its consulting arm in 2004, Infosys has invested 193 crore ($45 million) in the wholly-owned subsidiary, including 81 crore invested in 2008. During 2008-09, Infosys Consulting serviced 96 clients, and generated revenues of 287 crore with net loss of 59 crore, according to the annual report.