These deals will expand Infosys’ business in key growth regions of Japan and South East Asia as well as in the banking space in continental Europe.
The Dutch bank will retain 25% in Stater, which offers mortgage services to over 50 clients in Europe. “This transaction strengthens our approach to offer clients digital platforms and industry-focused solutions,” Infosys president Mohit Joshi said in a statement.
For Infosys, these partnerships with large global enterprises provide access to clients in key markets aimed at hastening growth in the business process management business where clients and deals lead to long-term relationships. The Bengaluru-headquartered company will retain the existing management at Stater and expects to close the transaction by June 2020.
“Infosys offers specific expertise,” said Erwin Dreuning, managing director of Stater, as the Indian company is already active in mortgage administration services. “It opens up opportunities for us to grow and service other clients,” Dreuning said in a statement.
INFY HAS TURNED MORE AGGRESSIVE
Last September, Infosys entered into a similar joint venture with Singapore’s Temasek, buying a 60% stake in its IT unit. That deal fetched Infosys a large captive customer base besides portfolio clients in South East Asia. In December, it announced a JV with Hitachi and Panasonic in Japan, buying an 81% stake in Hitachi’s fully owned subsidiary to help build an indirect procurement system for the two hitech electronics producers.
Indian IT companies have entered into joint ventures before — such as Tata Consultancy Services’ deal with Japan’s Mitsubishi — to grow revenues in specific markets. TCS also has a JV with General Electric in Saudi Arabia. However, Infosys has lately grown more aggressive in spotting and closing such deals, said analysts.
“Infosys has ensured that they ready their sales engine to successfully convert the pipeline of large deals,” said Ashish Chopra, an analyst with Motilal Oswal. “Aggression is not necessarily on pricing, but flexibility with respect to location mix, talent mix, different engagement and payment models.”
The latest deal with Stater will help Infosys grow its banking and financial services revenue in Europe. In the third quarter, the company had reported slower growth in that region, leading analysts to question if clients were holding back deals.
Infosys’ Joshi had told analysts in January that compared with strong growth in Asia-Pacific and the US, the company saw “relative weakness in the Europe portfolio”. He clarified that such weakness was not due to a dropoff in volume or orders but “largely because of some unanticipated furloughs towards the end of the quarter”. The Infosys stock closed 1.3% up at Rs 738.50 on the BSE on Thursday.