Infosys expands in Europe through Philips deal

Indian outsourcer Infosys Technologies Ltd. has bagged a US$250 million business process outsourcing contract from Royal Philips Electronics N.V. in an unusual deal in which Infosys will also acquire Philips’ services delivery centers in India, Thailand, and Poland for US$28 million.

Under the seven-year contract, Infosys BPO Ltd., a subsidiary of Infosys Technologies, will provide Philips with finance and accounting services, and purchase-order processing, said T. V. Mohandas Pai, Infosys’ director of human resources.

Infosys will add about 1,400 Philips staff to its own BPO team. Of these 765 are in Poland, 190 in Thailand, and 445 in India.

Infosys does not plan to move any of the jobs to India, as the staff in Poland will after one year also service Infosys’ other clients, Pai said.

These staff bring a wide range of skills and abilities, which include diverse language capabilities, technical expertise and domain knowledge, Infosys said.

The new centers will help Infosys build up its business in finance and accounting, for which Infosys already has over 3,500 staff, Pai said.

The deal with Philips gives Infosys a larger presence in Europe, a market where the company has been trying to increase its presence with new offices and a delivery center in Brno, in the Czech Republic.

Infosys also hopes to attract other customers in Europe that are interested in a similar model as the one with Philips, Pai said. Customers in Europe have been typically averse to shedding staff, and prefer that the outsourcer hires them.

The opportunity for Infosys is to also work down the line on other business processes within Philips, that are not covered under the current contract, Pai added.

For the quarter ended June 30, Europe accounted for US$248 million, or 27 percent, of Infosys’ total revenue, with most of it coming from the U.K. The U.S. accounted for 62.6 percent of revenue.

Europe however had a larger share of the company’s revenue from BPO services, at about 40 percent, of which 30 percent came from the U.K., Pai said.

In a similar deal, another Indian outsourcer Tata Consultancy Services Ltd (TCS) bagged an order from Pearl Group Ltd, an insurance and pensions firm in the U.K., to handle its business processes.

As part of that deal, Pearl Group staff were moved to a subsidiary set up by TCS in the U.K.

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