India’s Infosys To Acquire Panaya For $200 Million To Add Automation Technologies

Infosys Ltd. has agreed to acquire privately held Panaya Ltd., a provider of software automation services, for $200 million, Infosys said in a release on Monday. Panaya uses its CloudQuality software suite to help customers including Apple Inc., Toyota Corp., Astra Zeneca Inc. and Verizon Inc., manage their business software packages from SAP SE and Oracle Corp. Most of these companies are also Infosys customers.

Infosys CEO Vishal Sikka, a former chief technology officer at SAP, is betting automation and artificial intelligence will help Infosys both reduce the number of people needed to deliver plain vanilla computer software maintenance and redeploy programmers and engineers on to higher-margin services.

“The acquisition of Panaya is a key step in renewing and differentiating our service lines. This will help amplify the potential of our people, freeing us from the drudgery of many repetitive tasks, so we may focus more on the important, strategic challenges faced by our clients,” Sikka said in the release.

Sikka took over as chief executive at Infosys in August 2014 and has put in place several initiatives to stem the loss of talented people at the company, the highest among its peers such as Tata Consultancy Services Ltd. and Cognizant Technology Solutions Inc.

He is pushing Infosys to refocus on the twin objectives of winning large outsourcing contracts on the one hand and building high-end consulting and technology capabilities on the other.

“Acquisitions such as Panaya are important to making the shift from services-driven to software-driven player. Panaya's strength is utilizing hard-core math to solve problems such as upgrades, extensions, testing, etc. The acquisition means Infosys is serious about software driven solutions,” Ray Wang, principal analyst and founder at Constellation Research, a technology services advisory firm, told International Business Times in an email.

The acquisition of Panaya is expected to conclude before March 31, subject to various regulatory approvals, Infosys said in the release. This is the biggest acquisition the company has made since acquiring Swiss consultancy Lodestone Holding for about $350 million.