MUMBAI (NewsRise) -- Infosys formed a joint venture with Hitachi, Panasonic, and Pasona to create a digital procurements platform as India's second-largest software exporter presses the pedal to bulk up its new technology business.
As part of the deal, Infosys will buy 81% stake in Hitachi Procurement Service, a unit of Hitachi that handles material purchasing functions for the group, the Indian company said in a statement. The three Japanese companies will be minority shareholders of the entity, it said without disclosing the financial terms of the deal.
While Infosys will bring its technology expertise in consulting, analytics, and digital technologies to the venture, Hitachi and Panasonic will add heft with their capabilities in procurement and supply a local team, the Bengaluru-based company said. Staffing firm Pasona will additionally support with manpower and process management networks in Japan, it added.
"This transaction is a significant demonstration of our commitment to building a local presence in the region in order to partner with our Japanese clients," said Deepak Padaki, executive vice president and head of corporate strategy at Infosys.
Mumbai-and New York-listed Infosys is stepping up efforts to build its digital business amid a shift in client preferences to new technologies such as cloud computing and artificial intelligence. The software exporter earns 31% of its revenue from digital initiatives, but the company has been slow in winning large digital orders, unlike its larger rival Tata Consultancy Services that bagged mega deals from the likes of Prudential Group and Transamerica.
Over the past two years, Infosys has been distracted by a raft of management changes and leadership turmoil. Its new chief executive in Salil Parekh, who came on board almost a year ago, is trying to steer it toward the new technology order.
In the three months ended in September, Infosys reported its best-ever quarterly deal signings worth $2.03 billion.
In September, Infosys struck a similar deal in Singapore, where it signed a joint venture with Temasek Holdings to offer cloud computing solutions to the city-state's investment house. The deal entailed Infosys integrating its team with the operations of a unit of Temasek, which delivered cloud, data and analytics, and cybersecurity solutions to the Singaporean company and its other clients
Meanwhile, TCS, India's largest outsourcing company, is an early bird in the more than $100 billion market for information technology in Japan. The company had in 2014 invested $50 million to create a joint venture with Japan's largest trading firm Mitsubishi that now houses its Japanese business.
Still, TCS has not managed to make any deep inroads into the largest IT market in the world after the U.S.
"Japanese companies have not done any meaningful offshoring, even after two decades of the outsourcing boom," said Sudin Apte, founder and chief executive of advisory firm Offshore Insights. "The global offshoring model may not work out in Japan. An Indian outsourcing company would need the support of a culturally aligned local firm to act as a nodal point between a Japanese client and its offshore teams."
Shares of Infosys closed 1.3% higher in Mumbai trading on Friday, while the benchmark S&P BSE Sensex gained 0.1%.
--Dhanya Ann Thoppil