Royal Philips Electronics has awarded a seven year, $250 outsourcing deal to Infosys BPO, Infosys Technologies’ business-process outsourcing (BPO) subsidiary for F&A services such as payroll and purchase order processing. Interestingly, this deal is one of the biggest outsourcing contracts awarded to any Indian provider in the area of F&A.
Infosys BPO, which presently operates in the Czech Republic, China and the Philippines, also eyes to expand its European operations by acquiring three shared-service centers located in India (Chennai), Poland (Lodz) and Thailand (Bangkok) from Philips for $29 million. As a part of the acquisitions, approximately 1,400 Philips’ employees will be shifted to Infosys. While Philips presently has 125,800 (approx.) employees in more than 60 countries, Infosys BPO employs about 11,200 people.
"The contract, which has been structured like an acquisition, will add 12% to the company's overall revenue per year," says Amitabh Chaudhry, CEO, Infosys BPO.
By acquiring these three centers, Infosys will get an assured outsourcing business of about $250 million.
“The Philips acquisitions in Poland make Infosys’ Eastern European nearshore presence the largest of all its Indian and most of its multinationals competitors,” says Michael R. Guilbault, Senior Analyst, Technology Business Research. “The Philips acquisition in Thailand increases Infosys BPO’s presence outside of India to another low-cost location that is not plagued with attrition and wage hyperinflation. Lower attrition and slow wage inflation in both Poland and Thailand will boost margins by decreasing training and recruiting costs and keeping salary growth in check,” he adds.
Earlier this year, another major F&A outsourcing deal was inked between Sweden-based SKF and Capgemini, to manage a broad range of F&A processes. Under the terms of the contract, Capgemini will deliver multilingual services covering SKF’s accounts payable, accounts receivable and other services. The firm will handle the tasks from its dedicated BPOs in Krakow, Poland, which boasts more than 1,200 F&A experts serving international clients in 25 different languages.
This is Infosys BPO's second acquisition; in December 2003 it had acquired Australian firm, Expert Information Services for $22.9 million. And, last month there were rumors of Infosys possibly bidding for a stake in the European major Capgemini.
