Wednesday, August 27, 2014

Infosys

Infosys hunts for startups to partner

Infosys hunts for startups to partner

BANGALORE: Infosys has begun to engage with venture capitalists to identify startups to work with or to acquire. "There are a lot of innovative startups. We started talking to VCs a couple of weeks back and we had a large VC showcase 6-7 startups," said Infosys COO UB Pravin Rao at the Motilal Oswal investor conference in Mumbai on Tuesday.

IT services companies have started engaging with startups in an effort to access innovative solutions or fill gaps in their technology portfolio. Newer technologies like cloud, mobility and analytics have led to a blooming of startups with creative ideas. Wipro has been active in the space. It already has strategic investments in two — Axeda Corp and Opera Solutions — and has been scouting for more partnerships. TOI reported this month that Wipro is in talks with startups Flytxt, 99tests and Avekshaa Technologies for strategic tie-ups.

Rao said there are gaps in Infosys' capabilities in areas like healthcare and lifesciences, where it has limited presence compared to some of its competitors.

Last year, Infosys set aside a $100 million innovation fund to invest in products, platforms and solutions (PPS). The company hived off the PPS %business into a wholly-owned subsidiary called Edgeverve Systems. PPS contributes 5.2% of Infosys' $8.2 billion revenues.

"We already have shareholder approval for deploying the $100 million fund. We will look to partner with some startups. We are looking at acquisition in the space as well because that is also going to be critical," said Rao.


Infosys COO UB Pravin Rao 

Rao said Infosys has taken several measures to contain attrition that had touched 19.5% in the June quarter. He said the company has brought in predictability in the compensation structure and had switched to a quarterly promotion cycle. "We expect it to take a few more quarters before we get back to 13-15% attrition, which is where we are comfortable," he said.

Rao said the company needs to build capabilities in some markets where it does not have presence, like Latin America and Japan. "Obviously we will take time to scale organically in these areas, so we will continuously look at acquisition in this space. It's not that there are too many candidates, but we are always looking to acquire, to build capability or expand presence in these markets," he said.

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