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| Infosys technologies |
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| An Expert
acquisition |
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Mitu Jayashankar
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| Murthy:
Making an acquisition is
like falling in love; you
can't say when or how it
will happen |
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Four years after it
raised money through its ADR issue, Infosys
Technologies finally announced an acquisition.
During this period, the company claims to
have looked at 135 possible candidates. It
finally settled on an unknown, unlisted, small
Australian company - Expert Information Services,
a 10-year-old IT services company with an
annual turnover of just $34.6 million (net
profit: $5.2 million).
Infosys will pay $22.9 million for the acquisition.
For a company that is on its way to become
a $1-billion enterprise, this is indeed small
change. But it is still an important milestone
for the company, so much so that chief mentor
N.R. Narayana Murthy broke a self-imposed
silence to announce the news to the Bangalore
press. (Since March 2002, Murthy has stopped
attending press meets. The last time he appeared
was a few months ago, when the firm announced
its out-of-court settlement in the Phaneesh
Murthy sexual harassment case.)
The acquisition is significant. Through it,
Infosys will silence critics who say it has
not made any acquisitions because it is risk-averse
and conservative. But that's not all. With
the 330 employees that it gets post acquisition,
Infosys has virtually doubled its number of
local (non-Indian) employees. That
makes a nice case for cultural diversity.
Moreover, Infosys claims that the acquisition
will strengthen its operations in Australia,
a fast-emerging market.
Last year, Infosys earned just $10.3 million
from Australia, where it employs only 73 people.
But it works with a significantly large customer:
telecom giant Telstra. With strengths in the
telecom space, Expert (66% of its revenue
comes from telecom) can add significant value
there. How well Infosys handles the integration
of these employees will decide the future
course of its acquisition strategy. |
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