Every quarter, for the past couple of years, Infosys talks about acquisition. It even spells out the amount of money it is willing to spend and sometimes even talks about the target company?s location on the map. This time too it has not missed out. Company co-chairman Kris Gopalakrishnan on a tour of China, the other day, revealed that it is willing to spend up to $700 million should an attractive target cross its path.
Even the usually sedate CEO SD Shibulal flirted with the media when quizzed about possible acquisitions during Q2 results day. ?We?re dating now. It?ll take a while to get engaged,? was his response.
So this time too there is this nice buzz around Infosys and acquisition, but the question is whether all this will result in anything significant. According to Kris, Infosys is looking at acquisitions in three different areas?one is a location based acquisition, second is a target that has platforms that Infosys can leverage and sell, and third is a target company that focuses on specific industries. He also threw in one more interesting comment saying that the company wanted to grow its health care practice faster.
There are reports that Infosys is eying the healthcare business of Thomson Reuters. In this context, Kris? comments in China assume special significance. Thomson Reuters has already announced its intention to sell the healthcare business. So there is a match here but Infosys has not officially acknowledged it.
An acquisition is a tough act now with the global economic slowdown but Infosys has been waiting for long. Its attempt to purchase British SAP provider Axon was aborted by HCL?s higher bid, a few years ago. Conservatism has been Infosys? hall mark, but that?s a habit that the firm is trying hard to change under new chairman KV Kamath.
Its last acquisition was in 2009, when it bought out insurance BPO player McCamish for $58 million. In 2006, Infosys had acquired Citicorp?s stake in Progeon for $115 million. For a company of Infosys? size it has made only very few acquisitions. Its take has always been that it need not acquire for scale, but only for value.
Kris has been thinking about mobility as a key driver as well. ?In developing countries the penetration of mobile is significantly higher than PC or the Internet. If you are a business today, you need to reach out to the consumer through mobile technology. Mobile commerce, mobile cash. Bringing mobility into your corporate IT is a key priority for businesses. With mobility, cloud will also become very important. So cloud technologies will also take off. We have a practice around mobility, practice around cloud, we have a practice around sustainability and also focusing a lot more of our own business into emerging markets to support our global clients,? he said recently.
Infosys is sitting on cash reserves of nearly $4 billion. That?s hell of a lot of cushion. Will Kamath-Kris pull out the ace up their sleeves during the final quarter? That?s a very likely scenario. In an interview to FE, Kamath had said that he wanted Infosys to look beyond banking solutions and grow other verticals at a similar pace.