UPDATE 1-Infosys says seeks acquisitions worth up to $700 mln

Thu Oct 27, 2011 12:01am EDT

* Size of acquisitions sought up to 10 pct of revenue

* Aims to grow pharma, healthcare practices faster

* Says China unit revenue to grow 30 percent next year

By Melanie Lee

SHANGHAI, Oct 27 (Reuters) - Infosys Ltd , India's No.2 software services exporter, is looking for acquisitions worth up to $700 million, Infosys' Executive Co-Chairman Kris Gopalakrishnan said on Thursday.

Infosys has been on the hunt for acquisitions in the healthcare and life science sectors and is looking at firms that have platforms or niches in geographies that its lacks.

"Typically, the size we are looking for is up to 10 percent of our revenues so today our revenues are projected to be about $7 billion so up to $700 million," Gopalakrishnan told reporters.

"We want to grow our pharma practice, our healthcare practice faster so it's really to stimulate growth, but strategically. It's filling in gaps that we have," he said.

India's IT sector, which feeds off increased outsourcing by companies looking to cut costs, is expected to face pricing pressure and a decline in new orders as Europe struggles with a debt crisis and the United States battles an economic slowdown.

Gopalakrishnan said the European financial crisis has weighed on growth in the region and was one of the reasons for the slight downgrade in revenue growth this year to 17-19 percent from 18-20 percent.

"The European financial crisis is impacting our growth in Europe," said Gopalakrishnan, adding that businesses are putting off signing contracts due to the uncertainty in the business environment.

Infosys and its local rivals such as top ranked Tata Consultancy Services also face stiff competition from global players including IBM and Accenture for large outsourcing deals from global corporations.

Infosys said earlier this month that it aims to double the revenue share from Europe to 40 percent of its total sales by the end of its 2014 financial year.

The Bangalore-based company, a pioneer in India's $76 billion IT sector, has grown rapidly by employing thousands of engineers in low-cost Indian centres and catering to overseas firms, mainly based in the United States.

The firm also sees that China has a huge growth market, multinationals and Chinese companies with overseas ambitions looking to implement outsourcing.

"China as an overall subsidiary company, we did about $80 million in revenue and we see that growing at at least 30 percent next year," said Rangarajan Vellamore, chief executive of Infosys China.

Vellamore said current Chinese clients include those in the automotive sector and white-goods manufacturing sector.

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