Infosys, India’s second-largest IT services exporter, will look at acquisitions “across portfolios” especially relating to digital as part of a three-year road map to stabilise the business before increasing growth momentum, CEO and managing director Salil Parekh said.
“The three-year roadmap [starting this fiscal year] is to stabilise, build momentum and in the third year start to accelerate,” Mr. Parekh told investors on a conference call on Monday.
Mr. Parekh, who took the helm at the Bengaluru-based company in January, on April 13 announced Infosys’s first acquisition on his watch — the $75 million purchase of U.S.-based WongDoody Holding, a digital creative and consumer insights company. Infosys said at the time it also planned to sell Skava and Panaya — both acquired during former CEO Vishal Sikka’s tenure. The company also said it had accounted for an impairment loss of ₹118 crore in respect of Panaya in the consolidated financials for the year ended March 31.
‘Fantastic acquisition’
“There is lot of hype about Salil’s undoing what Vishal did; I strongly disagree to that,” Sanchit Vir Gogia, founder & CEO of Greyhound Research, said in a telephone interview. “Salil has a very interesting acquisition strategy. If you look at WongDoody it is a fantastic acquisition. IT budgets are moving away from CIOs [chief information officers] and 50% of the budget by 2020 will sit with non-CIOs. In the light of that, what is critical for Infosys is to create mindshare with non-CIO roles. The way you do that is to acquire companies like WongDoody.”
Mr. Parekh said the digital business was growing and that Infosys would strive to make it more relevant to the client’s future.
“Based on external analysts’ views, the market opportunity is $160 billion or more today,” he said. “The addressable market is growing at high double digits, 16% or more. We want to navigate through the digital journey. This is the great big market we want to go after.”
Without elaborating on the kind of businesses Infosys would look to acquire, the CEO laid out the broad opportunities the company sees in ensuring customers are digital ready.
“There are five dimensions of digital. First is the experience, such as mobile or mini-channel. The second is insight. Then comes innovations on the sectoral platforms such as IoT and digital product engineering. Last is to accelerate legacy and modernise” followed by cybersecurity and testing, he added.
And given a war chest of ₹19,818 crore ($3 billion) in cash and cash equivalents as on March 31, niche acquisitions similar to WondDoody should be relatively painless.
We are expecting from Salil too much. You have got to wait it out. We need at least six to eight quarters before we can say he is an antithesis to Vishal.”
