Infosys, Wipro chase same co for first time

BANGALORE: India’s tech posterboys and cross-town rivals Infosys Technologies and Wipro have shown interest in buying out the US-based high-end analytics company MarketRx. The indicative valuation of MarketRx is seen between $150 million and $160 million (Rs 615-650 crore), sources said.

This is probably the first time the Bangalore-headquartered Infosys and Wipro are seen chasing the same company for a possible acquisition. MatrixRx’s $160-million valuation is five times its revenue, the sources added. It is believed that the promoter expectation is “slightly north of this valuation”.

It is learnt that four-five suitors have expressed interest in MarketRx after the company mandated William Blair & Company in the US and Avendus in India to explore options, which could lead to a possible sellout. “The promoters are exploring various options regarding the future and will take an appropriate decision. The process is on,” said a source familiar with the developments.

For software services biggies like Wipro and Infosys, the acquisition will give a headstart in the analytics segment of the knowledge process outsourcing (KPO) segment, as it takes considerable time to build one’s practice organically in this business. According to industry sources, it will take a minimum two years for any BPO to have a credible presence in the analytics space.

with people coming from diverse backgrounds such as mathematics, statistics and chartered accountancy.
Industry observers said analytics services bring in higher revenue per employee compared to conventional IT services. The rates of analytics services range between $30 and $60 per hour while some high-skilled statistical modeling processes attract up to $150 per hour.

Wipro has been focusing on inorganic growth, with its now famous string of pearls strategy. Infosys, on the other hand, is getting aggressive on the M&A front. A target like MarketRx provides the BPO arms of both Wipro and Infosys a platform to get into transformational business deals. Unconfirmed reports suggested that BPO major WNS could be also in the fray, but ET independently learns that the Gurgaon-based company is unlikely to join the race. Early this year, WNS acquired another analytics firm Marketics for $65 million, valuing it almost 10 times its annual revenue. The names of the other likely contenders could not be ascertained, but sources said so far private equity firms have not shown any interest. An email query to MarketRx did not elicit response, while Infosys and Wipro declined to comment on speculative reports. MarketRx was started in 2000. It has over 350 employees spread across the US, Europe and India. Its list of investors include the US-based venture fund Sequoia Capital. The India operations were started with the Gurgoan centre in 2003 and supports the US teams on collaborative projects besides servicing European and Asia-Pacific clients. MarketRx has more than 75 small and big pharma, biotechnology and medical devices companies as its clients. Third-party analytics is growing steadily in India with more players entering the space, but currently it being dominated by captive units of MNCs, especially the financial powerhouses. The likes of HSBC, Standard Chartered, Lehman Brothers, Deutsche Bank, Fidelity, Bank of America have their captive centres in India which do high-end analytics work.

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