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Infosys eyes acquisitions in US

March 27, 2009 12:50 IST

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Infosys Technologies Ltd [Get Quote] expects to find acquisition opportunities in the US during the downturn, co-chairman Nandan Nilekani was quoted as saying on Friday.

"Acquisitions will definitely be very accessible in this market from a price point of view," Nilekani told the Wall Street Journal in an interview. "If it makes sense, we'll do it."

Companies that operate in the healthcare and pharmaceuticals sectors might make particularly interesting targets, he said, adding that Infosys has $2 billion in cash and no debt.

In the interview, Nilekani reiterated Infosys's earlier guidance of about 12 per cent revenue growth for the fiscal year ending March 31. That would be a sharp deceleration from growth of 35 per cent, as measured by the US accounting rules, in the year ended March 31, 2008.

Nilekani told the Journal that potential customers are holding back both because of the economic crisis and a rise in protectionist sentiment.

On the economic crisis, Nilekani said "I've never seen this level of lack of clarity." He said executives are 'more focused on short-term tactical issues' than making bigger decisions about outsourcing.

In response, Nilekani said Infosys is working with customers on alternative payment arrangements, including some that would link fees to business results. Other customers are asking to pay on a per-transaction basis, rather than a lump sum for a system.

Nilekani said rising protectionist sentiment in the US is also affecting customers' decision-making about outsourcing.

The economic stimulus Bill, for example, includes a provision preventing participants in the US' financial bailout plan from hiring workers with H-1B visas, which are commonly used by the non-US outsourcing companies.

"Political issues have become more pre-eminent in our conversations," he added.

Partly for that reason, he told the Journal that he does not know whether more the US firms will lay off domestic workers and move more jobs to India, as International Business Machines Corp plans to do, Nilekani said.



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