Lodestone buy driven by need to balance portfolio: Infosys

The acquisition may take Infosys a step closer to its goal of becoming a software-and-services giant providing clients with higher value services and consulting. The company has recently completed implementing Infosys 3.0, a strategy that it expects will take it towards this goal.

"This acquisition fits perfectly into that strategy," chief executive SD Shibulal said adding it will help boost company’s presence in Europe.

However, he clarified that there will be no change in Infy’s FY13 guidance to reflect the new Lodestone buy. “The buy to enable Lodestone to have a global platform,” he told reporters.

Infosys, which symbolises India's rise as an outsourcing powerhouse, has struggled this year. It has missed sales targets, lost market share, put off an annual pay rise and seen its stock battered.

India's No.2 software services provider, expects to conclude the all-cash deal by October, the Bangalore-based company said. "We will pay two-third of the Lodestone buy amount at deal closure," Shibulal informed.

Lodestone will add 850 employees to Infosys' 150,000, including 750 consultants experienced in advising clients on the use business management software from SAP AG. It will also increase Infosys' clients to more than 900 from its current 700.

"The acquisition fits well with Infosys' business profile and the endeavour of the management to maintain strength in consulting and high-value added services," ICICI Securities analyst Kuldeep Koul said in a note to clients. Koul has a "buy" rating on the stock.

With inputs from Reuters.