India's Infosys Technologies wins US$250 million outsourcing deal from Philips Electronics

NEW DELHI: Indian software company Infosys Technologies Ltd. said Wednesday it has won a US$250 million (€180 million) outsourcing order from Royal Philips Electronics NV to handle its backoffice work relating to finance and administration.

Under the seven-year deal, Bangalore-based Infosys will take over the Dutch company's back-office centers in India, Poland and Thailand, Chief Operating Officer S.D. Shibulal told The Associated Press.

Philips currently uses these centers to process purchase orders, prepare bills and handle other tasks relating to financial administration. All that work will now shift to Infosys.

"This is one of the largest (outsourcing deals) in the finance and administration space," Shibulal said.

It is also "a first for Infosys" in terms of the number of employees that it will be taking over from Philips, he said. The three centers currently employ about 1,400 people and all of them will transfer to Infosys rolls.

"Infosys clearly demonstrated a willingness to invest in people with a strong HR process, better solution quality ... and a robust risk mitigation and transition plan," Gerard Ruizendaal, Chief Strategy Officer at Philips, said in a statement. "Their leadership capabilities were clearly evident in all interactions and proposal submissions, with a strong focus on the customer," he said.

News of the deal lifted Infosys shares by 0.7 percent to 1,990 rupees in Wednesday's trading on the Bombay Stock Exchange.

The deal is intended to help Philips focus on its core business of lighting and electronic equipment manufacturing, while Infosys benefits from higher revenues and expanding global footprint, Shibulal said.

"It is in line with our Europe strategy," he said. "The plan is to leverage the Poland center and further enhance our presence in Europe."

Companies like Infosys have seen their sales and profit grow rapidly in recent years as Western companies increasingly transfer software development and back-office work to India, where wages are low and skilled, English-speaking workers are plentiful.

To keep the momentum going, Indian software companies are looking to win more customers outside the United States, traditionally the largest client country.

Increasing orders from Europe also helps them cushion against a weak dollar or a possible slowdown in the United States.

Earlier this month, Infosys cut its forecast for full-year revenues and profit because of the rupee's sharp appreciation against the U.S. dollar.

North America accounts for 65 percent of the company's revenue that totaled US$3.1 billion (€2.24 billion) in fiscal year ended March, while Europe's share was about 25 percent.