Bengalauru: Infosys on Monday announced that it had agreed to acquire Panaya, Inc., a company whose technology helps reduce the complexity and cost of running and maintaining SAP AG’s Enterprise Resource Planning (ERP) software, for $200 million in an all-cash deal.
It’s Infosys’ first acquisition in three years, since the Bengaluru-based outsourcing giant, sitting on a cash pile of over $5 billion, acquired Switzerland-based SAP consulting firm Lodestone for $354 million in 2012. The acquisition of privately-held Panaya, founded and managed by Israeli brains, headquartered in Menlo Park, California, in the heart of Silicon Valley, has Infosys CEO Vishal Sikka written all over it. The investment arm of Mr Sikka’s former boss at SAP, Hasso Plattner, is an investor in the company, although Panaya sometimes seems to go head-to-head against SAP’s own similar offering, Sol Man.
Mr Sikka, himself based in Silicon Valley, has outlined a ‘Renew plus New’ strategy — renewing the company’s old lines of business with new technologies while stepping up on new lines of business such as Digitalisation, Analytics and Cloud — to return the company to its high-growth trajectory of some years ago.
The Panaya acquisition is an early shot mostly in support of the first part of that strategy: Infosys earns more than a billion of its over $8 billion annual revenues from its SAP practice, an old line of business. With Panaya, Mr Sikka seeks to ‘renew’ that practice by infusing new automation technologies into it. As customers demand lower bills from their outsourcing partners, especially for routine application development and maintenance contracts, automation technologies will help Infosys take low-level drudge work out and reduce the number of people it puts on SAP engagements while perhaps pushing up margins.
