Infosys' acquisition of Irish contact centre Eishtec will give it better delivery capabilities and access to customers in the European market, say experts.
As per reports, India’s second largest IT major acquired the Irish firm for an undisclosed amount and its 1,400 employees will now come under the Infosys BPM. This move, experts say, is strategic in the light of visa issues, upcoming Brexit and its expansion in a matured market like Europe.
Infosys is yet to make a statement on the acquisition. Moneycontrol has emailed the company and is awaiting its response.
Why Ireland? In recent times, a lot of IT majors have stepped up their investments in the region anticipating a no-deal Brexit. In case of a no-deal Brexit, it would stop free movement between the UK and EU immediately. That would mean huge shift in the existing workforce and will bring about changes in the way business is conducted between enterprises in the UK and its EU clients.
At present, many firms service their EU clients, out of the UK. But that will have to change in the light of Brexit and companies are already bracing for the same. Ireland levies a corporate tax of 12.5 percent and its proximity to the UK makes it easier for companies to shift their operations compared to other countries in the EU.
Infosys' move could also be one in that direction.
How will this acquisition help Infosys? Pareekh Jain, founder, Pareekh consulting, says, Eishtec and Infosys already share some key clients, with the acquisition allowing the latter access to its other customers.
Eishtec, established in 2011, services range of portfolio including telecom, social media, healthcare, edtech and fintech sectors. For Infosys, this acquisition will give it both geography and customer access.
For one, the buy definitely increases its delivery capabilities in the region and helps it service clients in the UK and European Union better.
Europe accounts for about 23 percent of the company’s overall revenue. As IT firms are now looking to diversify, access to more customers definitely helps.
Through the Irish contact centre, Infosys can tap into Eishtec's customer base and cross-sell its products. “The company can go further from being a contact centre and slowly offer its digital capabilities such as analytics in the customers' journey to transform digitally,” Jain added.
Bigger IT firms are finally looking at inorganic growth as a means to expand, says another expert, adding: "So far, acquisitions were not the preferred way to grow for major IT firms. However, that is beginning to change in the recent times. The acquisition shows Infosys' intent to grow by the inorganic route, especially in a matured market.”
Earlier this year, Infosys acquired 75 percent stake in Stater, a subsidiary of ABN AMRO, for about Rs 989 crore to grow its mortgage business in the US.
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