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Infy scouting for BPO firm in Canada

By Ravi Menon in Bangalore
July 08, 2009 11:59 IST
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Infosys BPO Ltd, the business process outsourcing operation of Infosys Technologies, is looking at raising its headcount in the Americas through inorganic growth. The company is understood to be scouting for a strategic acquisition in the $40-60 million range either in Canada or the US, according to industry sources.

"Infosys is looking at acquiring a small or mid-sized company, specialised in providing mortgage or insurance BPO services to grow faster in Canada.

This will help speed up verticalisation efforts currently on at Infosys BPO. The mortgage sector in Canada has seen a number of promising start-ups, as well as established mid-sized companies coming up over the years.

Infosys BPO is looking at further growth in the key mortgage and insurance verticals in Canada, where a strategic acquisition will boost the scope for higher knowledge work, like financial research and analytics," sources said.

The BPO arm has a stated focus on transaction-based processing work, particularly in the finance & accounting software space. Mortgage solutions have emerged as a key vertical for the BPO operations.

An Infosys BPO spokesperson declined to comment on any acquisition plans or time-frame for the deal. The company is presently in its self-imposed silent period as a run-up to announcing its first quarter financial results on July 10.

Infosys has said that it will increase its hiring in overseas markets, including the US and Canada. In the current fiscal, the company plans to hire about 1,000 people in overseas locations, including the US, which is more than double that of last year's figure.

The company is not keen on making acquisitions in India, as it is capable of growing organically quite fast in the country. Chief Executive Officer S Gopalakrishnan had said at the company's annual general meeting in Bangalore on June 21 that Infosys saw a requirement for acquisitions more outside India, where it faced challenges in adding employees.

To tackle pricing pressures from clients in the US and Canada, Infosys Technologies has been increasing its focus on new engagement models, such as platform-based BPO services, Software-as-a-Service and Finacle to maximise the value delivered to its clients.

The BPO business of Infosys posted gross revenues of $316.2 million (Rs 1,520 crore) in the fiscal year to March 31, 2009 and employed 17,398 people at the end of the fiscal.

The BPO arm is presently recruiting from smaller towns like Mangalore and Mysore, as part of its focus on the domestic market and to capitalise on lower rentals and employee costs. It is also looking at tying up with rural BPO outfits to save on real estate costs. The company had last month set up a dedicated domestic market arm, with an eye on the $1.6-billion domestic BPO market.

Infosys Technologies, which had cash reserves of Rs 9,695 crore (Rs 96.95 billion) as on March 31,  had made two successful acquisitions during its nearly three decades of existence. Earlier acquisitions were that of Australian firm Expert Information Technologies for close to $23 million in 2003, and the buyout of Philips' global BPO operations in 2007.

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Ravi Menon in Bangalore
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