Infosys acquires UK SAP consultancy Axon Group for £407m
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IT giant’s largest acquisition to date heralds start of the Indian invasion
Indian IT services giant Infosys has agreed to acquire UK-based SAP consultancy and services company Axon Group for £407.1 million.
The deal represents the company’s largest acquisition ever and the largest cross-border acquisition by any Indian IT company.
"The objective is to create a leading global SAP services provider," Infosys CEO Kris Gopalakrishnan said at a press conference. "There is strong demand for these services, and the deal will allow us to leverage the capabilities and strengths of both companies to have the global reach, the scale and the financial strength to participate in deals that are large.”
In its most recent financial half-year, Axon Group derived 42% of its £123.9 million revenues from the North American market, thanks in part to its own acquisition of US-based SAP practice EnterSys earlier this year.
A third of the company’s headcount is located in its offshore delivery centres in
The company has a particular stronghold in the local government IT services market, and counts the city councils of
The £407.1 million figure represents a 33% premium on the
And so it begins…
An acquisition of this kind, whereby one of the Indian IT giants acquires a sizeable Western IT services provider, has long been predicted.
Factors such as currency fluctuation, employee churn and the rise of alternate offshore destinations are threatening to curtail the phenomenal success of the Indian IT outsourcing industry.
Companies such as Infosys, Wipro and TCS are therefore eager to increase the value of the contracts they can offer their Western clients, moving from application development donkey-work to the kind of consultative partnership that the likes of Accenture and IBM have with their clients.
To do this, however, requires local presence and a caliber of consultant that their vast software campuses are not yet geared to producing. And while they have cash in reserves and the rupee is strong, now is an ideal time for Indian IT providers to buy those in.
Analysts predict that Infosys’ Axon deal will be the first of many ‘outbound’ acquisitions by Indian IT companies.
"We expect such a trend to continue and we believe the transaction by Infosys would act as a catalyst for similar moves by other Indian IT companies", Manoj Agarwal, ABN AMRO's Head of Investment Banking for
Further reading
Infosys - The human pyramid
The Indian IT pioneer is grappling with the challenge of changing from service provider to an innovative business partner
Offshore 2.0
Organisations are now looking to their sourcing partners for technology and business process innovation
The rising cost of software and support
As SAP and Oracle prepare to increase their fees, are IT organisations about to be hit by a steep rise in the cost of buying and maintaining business software?
Find more stories in the IT Services Briefing Room
