Infosys BPO buys outsourcing arm of Marsh & McLennan

Infosys BPO, the business process outsourcing (BPO) arm of Infosys Ltd, on Monday said it had acquired Marsh BPO, the business process outsourcing arm of the US-based Marsh & McLennan Companies, for an undisclosed amount.

The company said the acquisition would give it annualised revenue of $10-12 million.

Swaminathan D, chief executive officer and managing director of Infosys BPO, said the company aims to retain all the 87 employees of Marsh BPO, who are located in Des Moines, lowa in the US.

The company also plans to recruit 20-25 employees in Des Moines, in the next two-three months, he added.

Infosys BPO, which closed its financial year 2011-12 with a revenue of $494.5 million, employs 23,288 people.

TARGETING EUROPE
How the acquisition of Lodestone will help Infosys

Why Lodestone?

• Acquisition is in line with Infosys 3.0 strategy wherein consulting and system integration play major role other than products and platforms
• It is also in line with company’s strategy to increase its pie in continental Europe which accounts for about 10% of Infosys’ European revenues

Integration plan

• Transaction is expected to close by the end of October 2012
• Lodestone to continue as a subsidiary of Infosys in Europe
• Ronald Hafner will continue as the CEO of the subsidiary while B G Srinivas,board member and Head of Europe, Infosys will be the chairman 

What Lodestone brings to the table?

• 850 employees including 750 SAP consultants
• Over 200 clients including names like BMW, Allianz, Kimberly-Clark, Sandoz SHAPE, Warner Chilcott. The clients Lodestone brings belong to diverse sectors such as manufacturing, automotive, life sciences
• The acquisition will make Infosys’ consulting revenue focussed on SAP practice to reach $1 billion per annum
• Consulting & SI to account for over 32% on Infosys’ overall revenue post the integration

Realistic valuation 

• The acquisition is valued at 1.3 times of Lodestone’s enterprise value/sales in Calendar 2012. This is a favourable valuation for Infosys when compared to other similar acquisitions. For example, HCL-Axon deal was valued at 2.2-times EV/sales; the Wipro-Infocrossing deal was valued at 2.6-times

Acquisitions made by Infosys so far

2003:  Infosys acquired Australian IT services provider Expert Information Services for about $23 million

2007: Acquisition of the captive BPO operations of Dutch consumer electronics giant Philips for $28 million (The acquisition came bundled with a business commitment of $250 million over a period of time)

2009: The company acquired US-based insurance and financial service back-office service provider McCamish for $58 million

2011: Acquired Australian company Portland Group, a provider of strategic sourcing and category management services for AUD $34 million

Infosys BPO is an end-to-end outsourcing services provider, operating in the Americas, Asia Pacific, Australia and Europe.