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Infosys eyes buys in Europe, Japan

Infosys eyes buys in Europe, Japan
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First Published: Sun, May 01 2011. 05 07 PM IST
Updated: Sun, May 01 2011. 05 07 PM IST
Bangalore: Infosys, India’s second-biggest software services exporter, is on the hunt for acquisitions in Europe and Japan in areas including healthcare and public services, its chief executive said on Sunday.
Speaking to Reuters a day after the company announced changes in its top-level management, S. Gopalakrishnan said Infosys could acquire companies with annual revenues of up to $600 million.
“Up to $600 million may not pose too much of a risk or burden on the company. But it’s a thumb rule or a guideline rather than a hard and fast rule,” said Gopalakrishnan, who is set to step down as chief executive in August to become executive co-chairman.
Infosys was also seeking acquisitions in new areas like cloud computing, he said. The company had cash and cash equivalents of $3.8 billion as of the end of March.
“Our philosophy has always been that you plan organic growth,” Gopalakrishnan said.
“ (But) you keep your eyes and ears open, you have a dedicated team looking at acquisitions.”
“We do not want to set a target for acquisition because we are not doing acquisition for growth. We are doing acquisitions for strategic fit and adding capability at this point in time,” he said at the company’s sprawling headquarters campus on the outskirts of Bangalore, India’s information technology hub.
Several Indian technology players including Infosys’s larger rival Tata Consultancy Services and smaller rival Wipro have been looking for overseas acquisitions to boost growth amid growing competition from global rivals such as IBM and Accenture .
Indian software firms are also looking to reduce a dependency on their US market, which accounts for more than half of the sector’s revenue, and want to expand operations in European and Asian markets.
“There are multiple strategic requirements for acquisition so those are the things we are looking at. Typically a smaller acquisition rather than a large one,” said Gopalakrishnan, one of the seven engineers who founded Infosys in 1981 with $250.
Reorganisation
Infosys, which is also listed on Nasdaq, on Saturday announced top management changes linked to the retirement of its billionaire chairman and stuck to its practice of giving its founders a shot at running the firm..
In a separate interview, CEO-designate S.D. Shibulal said Infosys planned to complete an ongoing reorganisation of its business divisions in about two months.
Infosys, which counts Goldman Sachs, BT and BP as clients, is struggling to meet growth expectations and its shares have fallen over 15% so far this year.
It is dividing its business into five global industry segments—financial services and insurance; manufacturing; energy, utilities, communications and services; public service practices and healthcare; retail and life sciences.
Infosys will also look to strengthen its geographical focus by having separate heads for the Americas, Europe and emerging markets, said Shibulal, who is also one of the founders of Infosys, and is currently its chief operating officer.
Wipro earlier this year also reorganised its key outsourcing business weeks after it decided to replace its joint CEOs with company veteran T.K. Kurien in an effort to boost growth.
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First Published: Sun, May 01 2011. 05 07 PM IST
More Topics: Infosys | Europe | Japan | Healthcare | Public services |