Infy BPO looks to acquire platform capabilities to expand offerings

Company says acquisitions of platforms BPOs to help it protect profit margins

Infosys BPO, the business process outsourcing arm of Infosys is looking at enhancing its platform BPO capabilities to expand its service offerings.

The company was evaluating acquisitions in the areas such as legal process outsourcing (LPO), healthcare, insurance and mortgage, to expand its service offerings in those areas without diluting its profit margin.

“When we look at acquisitions, we look at assets will come back to our normal margins within 18 months. We are not looking at acquiring assets which would result in diluting our margins,” said Abraham Mathews, CFO of Infosys BPO.

Infosys BPO closed FY13 with a healthy net margin of 22.5%. The revenues of Infosys BPO stood at $583 million (about Rs 3150 crore) on consolidated basis, a growth of 17.8% when compared with the previous fiscal.  

“We are looking at targets which would give us higher productivity and service offerings that we can leverage for higher growth,” added Mathews.

So far Infosys has made four acquisitions in the BPO space including two which gave it platform capabilities in the financial services and group insurance segments. The acquisition of US-based McCamish in 2009 (for $58 million) enabled the company to offer insurance and financial services using proprietary technology platforms.

In September last year, Infosys BPO did a small acquisition when it acquired Marsh BPO, the BPO unit of US-based Marsh & McLennan Companies for an undisclosed sum. However, the acquisition was significant for the company from the point of view that it helped it to acquire platform capabilities in the group life insurance space.

According to the company, Infosys BPO has presence in all the areas which are currently under its radar such as healthcare, insurance, mortgage and LPO. This is primarily to enhance competencies in certain areas and offer end-to-end back-office services to the customers.

“We are constantly looking at areas like healthcare, insurance, mortgage and also LPO. In all these areas, we want to expand our competencies in certain business lines,” said Gautam Thakkar, CEO & MD of Infosys BPO.

For example, the company is present in the healthcare segment in a small way. “We want to increase the size in healthcare and are constantly on the lookout for the acquisitions,” he added.

In the LPO space, Infosys BPO is looking at acquiring e-discovery platforms where the company has a small presence now.

Electronic discovery (or e-discovery) refers to identifying, collecting and producing electronically stored information which could be relevant in response to a request for production in a lawsuit or investigation. This not only helps companies to reduce costs but also from the risk of losing in litigations.

Infosys presently employs around 500-600 people as a part of its LPO practice. Globally, the company employs around 25,800 based out of across 23 delivery centres including six in India.

Infosys BPO acquisitions

Year	Target Company	Size	Capabilities
2007	Captive BPO operations of Philips	$25 mn	F&A, administration
2009	McCamish	$85 mn	Platform in FSI
2011	Portland Group	AUD 34 mn	Strategic sourcing, category management
2012	Marsh BPO	(Undisclosed)	Group life insurance platfrorm