Monday, August 25, 2008

Infosys to Acquire Axon & Potentially a Top 10 Position!

Infosys announced today its intention to acquire the SAP-Services specialist Axon for approximately $750 million, at a 19.4% premium over their share price.

The acquisition will create the largest SAP-Services provider of the major Indian Offshore players, and should place Infosys somewhere inside of the top 10 suppliers of SAP Consulting Services in the U.S.

While Axon is still a relatively new name in the U.S., they themselves acquired a large market-share in the U.S. through the acquisitions of SAP specialists Zytalis, Premier HR and TUI Consulting. Key clients include Xerox, BP, Orange, TXU, Transport for London, as well as major sub-contracting engagements in the U.S., such as the Home Depot.

At first glance, while Axon does quite a bit in the SAP Consulting Services market as a sub-contractor, the combination with Infosys should strengthen their go-to-market approach by doubling resources, and bringing together on-site project management, training and implementation skills with Infosys' offshore delivery prowess around SAP.

Will this bring another wave of consolidation between challengers in the SAP Services market?
I believe so, since while SAP Consulting, Accenture and IBM have gained critical mass in this market by offering a consistent set of services and capabilities across most geographies, other IT services companies have struggled to become truly global suppliers to this segment.

Here is a UK-centric point of view of this acquisition from one of the UK's leading IT thought leaders (and a former PAC partner), Richard Holway.