Infosys has bagged a multi-million dollar deal from Philips that will see it taking over three of its BPO centres, reports CNBC-TV18.
Infosys has struck a two-in-one deal - a business order and an acquisition. India's second largest IT company has managed to bag a seven-year USD 250 million deal from the Dutch consumer giant Phillips. It will also take over its BPO centres in Poland, India and Thailand.
Infosys said this deal will help it in many ways. Infosys will add over 1,300 employees from this transfer. The acquisition will help Infosys add 700 employees in Poland, 445 in Chennai and 190 employees in Thailand. Infosys BPO already has 200 employees in Poland.
Infosys BPO will also boost its finance and accounting practice, which currently contributes about 32% to its revenues. In the last financial year, Infosys said its BPO arm had revenues of about USD 148 million, with an annual growth rate of nearly 70%. For Infosys, this will be its first acquisition after four years. In 2003, it bought Expert Systems for nearly USD 23 million.
With this deal, Infosys BPO now has a stronger foothold in the East European and South East Asian markets. But what it really brings to the table is native competence in the language market and the ability to expand rapidly in Eastern Europe.
Excerpts from the exclusive interview with S Gopalakrishnan, MD & CEO, Infosys:
Q: What are the financials of this deal and for how many years will this multiyear contract take?
A: This is seven-year USD 250 million deal, and is in the area of finance and administration with some of the back office functions like purchase. This involves taking over three of these centers in Poland, India and Thailand and it involves taking over of about 1400 employees, it creates capabilities for Infosys in finance and administration. In fact it is one of the largest deals of this size from India and it puts us in the top five in the finance and administration area globally, also it gives us enhanced capabilities in Europe.
Q: Can you also tell us what are the kind of revenues that the Philips BPO currently has and the kind of guidance it has for the coming year?
A: Philips BPO is a captive unit for servicing Philips and that is what is being transitioned to Infosys. So when you look at this deal, it is approximately USD 250 million to Infosys over a seven-year period.
Q: It is also a kind of a small deal that you are talking about, market analyst were looking at a much bigger deal, why such a small deal at this point in time?
A: It is multiyear deal and one of the largest F&D deals out of India; when you look at the size of Infosys BPO, in F&D space, to takeover about 1400 employees, it is fairly significant. So in that sense, this is a significant deal from the BPO perspective.
Q: It does make a strategic fit into the Infosys BPO; will it be a complete merger itself with Infosys BPO then?
A: Yes, all these employees will get added to Infosys BPO, they will become Infosys BPO employees. Initially our focus will be to support Philips and make sure that we meet all their expectations but over time, the same capability can be used to support other clients, as of now our focus right now is of course Philips.
Q: Can you also tell us when this transition will be complete?
A: Over the next three-four months, the transition will be complete and maybe from the next quarter onwards we will be fully operational supporting Philips.
Q: What is the kind of revenues it is expected to add to Infosys BPO?
A: Over the seven-year period, we are looking at USD 250 million approximately.
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