Narayana Murthy takes an Aussie wicket

Murthy’s reasoning: Infosys did not acquire the Australian firm along with its employees fearing a backlash, but for a strategic intent. ‘‘There is going to be a quantum jump in revenue (from Australia) and it increases the number of Infosys employees in Australia,’’ he said.

For the financial 2003, Infosys had $10.3-million revenue from Australia, while for the first half ended September 30, 2003, it had a revenue of $4.59 million. Infosys has also taken on board the 330 employees (including 40 support staff and all Australians) of Expert. As on September 30, the Indian giant had 73 employees in Australia of which 19 were permanently based there.

Nandan Nilekani, CEO of the firm, said the rationale behind the acquisition was to expand Infosys’ operations in Australia, strengthen the management team there and also get local employees on company’s roles. ‘‘We are more than doubling our global workforce,’’ he said. Infosys while getting listed on Nasdaq in 1999 had said that one of the reasons was to raise currency for possible acquisitions. But it took them over five years and a look at 135 candidates before finally making it happen. ‘‘We wanted to acquire a company whose value system was similar, had complimentary strengths and the management had an entrepreneurial passion, confidence and respect in IT circles. This union should be a paradigm, where 1+1 will definitely be 3 if not 11,’’ Murthy said, explaining the delay in acquisition.

‘‘Acquisition is like falling in love and we cannot set a time-table (to fall in love). We have fallen in love,’’ Murthy added.

Expert has a client base of 40, with 74 per cent of its revenue coming from the telecom vertical. Expert achieved total revenue of $34.6 million (A$46.7 million) for the fiscal year ended June 30, 2003, and a net profit after tax of $5.2 million.

The transaction will be completed in January 2004 and the acquired company will be renamed Infosys Technologies (Australia) Pty Ltd. K. Dinesh, who is a co-founder and board member of Infosys has been designated as the chairman of the acquired company, while Expert founder and CEO Gary Ebeyan would be the CEO.

The value (A$31 million) would be transacted in two phases: An upfront payment and escrow of A$19 million at the completion of transaction and earn-out and transition bonus of A$12 million payable over three fiscal years starting the fiscal year ending March 31, 2005 for achieving certain financial targets and to retain key employees.

Incidentally, though the markets initially pushed the Infosys stock to an intra-day high of Rs 5,300, at close on Thursday on BSE, Infosys had a marginal drop of Rs 1.60 or 0.03 percent to close at Rs 5,120.50 against the previous day’s close.