India's Infosys Says It Needs to Increase Oveseas Presence

According to Business Week, India's second largest IT company, Infosys Technologies, has always experienced growth, unlike other competitors in India's technology arena which have gobbled up in acquisitions.Unlike its competitors, Wipro Technologies and Tata Consultancy Services who have been looking for acquisition in the U.S. and Europe, according to Business Week, Infosys, a Bangalore-based company, until recently had no reason to seek out acquisition. They have been steadily growing over the last five years at a rate of 40%.

However, per Business Week, as reported by Reuters on June 28th, Infosys was eyeing Europe's largest IT consulting and services firm, CAPP, Paris-based Capgemini. As rumors hit the marketplace, CFO, V. Balakrishnan of Infosys, denied the gossip because CAPP has a market capitalization of $10.5 million and Infosys is seeking acquisitions from companies whose worth is in the $100 to $200 million range.

As noted by Business Week, Infosys views consulting as a part of the market that could boost their bottom line and add value to its need for growth in its consulting services. Even though Infosys has experienced a rapid growth over in the past three years since its inception, and its sales were $111 million, the consulting side of the business lost $27 million this year through March, 2097. According to Business Week, VP of research firm Frost & Suillivan's IT practice in Mumbai, Alok Shende, said that as far as Infosys' stream of revenue, Infosys' consulting services have been sorely lacking.

The dollars to rupee currency swings have also had an effect on Indian outsourcers, even as U.S. accounts for over 70% of their revenue. The rupee, so far this year, has only grown 8% against the dollar. Unlike the U.S., Europe, per Business Week, has been unwilling to utilize Asian outsourcing which means, for Infosys, making major inroads in Europe is far more difficult.

Infosys, as reported by Business Week, is committed to bringing consulting competitors into the company on an executive level. For example, they approached Paul Cole, CAPP's former chief of global operations, Stephen Pratt, a former senior partner at Deloitte Consulting, and Romil Bahl, from EDS (EDS Consulting Services).

When CAPP acquired Kanbay International, it doubled its Indian workforce last year. This is significant in that if there were a deal between Infosys and CAPP, there would be an overlap in the workforce of about 18% of CAPP's global head count. According to Business Week, CAPP has already been struggling to find cost-cutting measures. Regardless, Infosys' desire to boost its share prices in the marketplace will still be seeking to make some kind acquisition deal.