Infosys Ltd has announced that it will be buying Panaya Inc, a New Jersey-based provider of automation technology. The enterprise value of the cash deal is a whopping US$ 200 Mn. According to Sudip Saha, Managing Consultant at Future Market Insights (FMI), the deal is in line with Infosys’ execution of “Renew” and “New” strategy through which the company aims to acquire “technologies for tomorrow” in areas of big data, automation, artificial intelligence, and machine learning.
From Defensive to Aggressive: A Change in Approach
When it comes to mergers and acquisitions, Infosys is perceived to be a defensive company. The company has been known to have some of the biggest cash reserves among Indian organisations, but it has not pursued emerging companies as aggressively as its competitors. In the recent years, Infosys has lost ground to Tata Consultancy Services (TCS), especially in the automation sector. The decision to acquire Panaya will help Infosys to strengthen its position in the automation and artificial intelligence domain.
Cloud Computing: Technology of the Future
Cloud computing is being hailed as the technology that will drive business transformation in the near future. Panaya’s ‘CloudQuality’ has become a reliable name in the industry for its seamless service and the acquisition will help Infosys to incorporate cloud computing in many of its service lines through software-as-a-service model (SaaS) model. CloudQuality will eliminate the ‘drudgery of many repetitive tasks’ and allow Infosys to focus on the strategic issues of its clients.
Acquisition will Help Infosys Boost Employee Productivity
The Indian IT industry has been going through some tough times in the recent past as clients have tightened their spending. Staff underutilisation has remained a persistent issue and companies have been looking for ways to increase the productivity of their employees. By acquiring Panaya, Infosys will be get access to the innovative automation technology, which will help the company to boost its revenues without increasing its staff drastically. According to Sudip Saha, Infosys’ acquisition of Panaya will help have a positive impact on the company’s bottom line.
Vishal Sikka, the CEO and MD of Infosys, has stressed time and again that the company will be looking at innovative solutions rather than focussing on ‘yesterdays’ companies. Vishal Sikka’s vision is to achieve a higher-than-industry growth in next two years, and this acquisition is a step in that direction. The Indian IT industry is expected to grow at around 14% in the 2014-15 fiscal, and Infosys wants to better that growth rate. Also, Infosys wants to change its perception of being a service driven company by giving a boost to its software driven solutions. The move to acquire Panaya will help Infosys to make that strategic change from service driven to a software driven company.
A Primer on Panaya
Panaya is based in New Jersey, and is a reliable name for cloud-based quality management services for enterprise applications. It is backed by venture-capital firms including Battery Ventures, Hasso Plattner Ventures, and Benchmark Capital. Panaya’s impressive list of clients includes Mercedes-Benz, Coca-Cola, and Unilever. The company has a presence in 62 countries and Infosys will hope to leverage this extensive reach in the future.
