Friday, June 29, 2007

Infosys could bid for Capgemini

Shares in Paris-based consultancy Capgemini and Indian software firm Infosys Technologies have jumped on reports of a possible merger.

Infosys declined to comment on "market speculation" that it planned to bid for the European group, bolstering its position in the technology market.

But investors chased the Bangalore firm's shares up 2.5% in India. Shares in Capgemini rose 4.61% in Europe.

A tie-up would help Infosys prepare for an outsourcing slowdown, analysts said.

Outsourcing slowdown

Infosys has grown exponentially over the past five years, capitalising on the demand for IT outsourcing from India's large and well-trained English-speaking engineering workforce, whose wages are on average a fifth of those in the West.

Margins are very high in consulting business as compared to other commoditised business Infosys has
Tejas Doshi, Sushil Finance

Infosys said its fourth quarter net profits leaped 70% to 11.4bn rupees ($267m; £134m) in the three months to 31 March, from 6.73bn rupees a year earlier.

But it recently said it expected earnings growth for the coming financial year to be more modest amid rising wage pressures and a strengthening rupee, which makes India a less attractive bet for outsourcing.More>>