Aayush Nangru | 11BM60023
In September 2012, Infosys announced the acquisition of Zurich-based Lodestone Holding AG, a leading management consultancy firm, for 330 million Swiss francs ($345 million or Rs.1,925 crore). Lodestone advises international companies on strategy and process optimization, and provides business transformation solutions enabled by SAP's enterprise solutions. Lodestone clocked revenues of $210 million in 2011. Of this, 50 per cent was from Switzerland and 23 per cent from Germany. The deal was an all-cash deal, with Infosys required to pay two-thirds of the money upfront and the balance after three years. The acquisition was completed by the end of October 2012, and post acquisition, Lodestone operates as a subsidiary named ‘Infosys Lodestone’ in Europe. The Swiss company brought in more than 200 clients from across several industry segments, including manufacturing, automotive and life sciences, to Infosys’ existing pool of over 700 clients. With this, the combined consulting practice based on the SAP programme, was expected to bring in revenues of more than $1 billion.
Infosys’ motives behind the acquisition
The Lodestone acquisition was expected to significantly enhance Infosys' global presence, particularly in continental Europe and emerging markets like Latin America and Asia Pacific. That was important because Infosys' share of revenues from Europe, its second biggest market, had been stagnant. It would give the Infosys management some breathing space from relentless investors, who were concerned with the large pile of unutilized cash on the company’s books. The deal provided hopes that the company will not hesitate to grow inorganically. The acquisition would help Infosys realize its plan to focus more on high-margin software and consulting services and less on labour-intensive outsourcing services. The company’s management had stressed that it wanted its software business...