Flextronics acquires FutureSoft

BANGALORE: Flextronics International Ltd., the world's largest contract electronics manufacturer, has acquired Indian telecom specialist Future Software Ltd (FutureSoft), the chairman of the Indian firm said.

K.V. Ramani said the value of the deal to sell 100 percent in privately held FutureSoft will be disclosed after approvals from India's central bank and the Foreign Investment Promotion Board expected in 4-6 weeks.

The acquisition comes two months after Singapore-based Flextronics said it would buy 55 percent in Hughes Software Systems Ltd, another Indian telecom software company, to boost offerings to clients like handset maker Sony-Ericsson.

"They (Flextronics) are acquiring 5-6 companies in India as a plan to make it a global design services hub," said Ramani, who also co-founded Hughes Software.

"The Indian strategy is to expand design. It is not just a cost reduction exercise."

Flextronics is among several global leaders expanding their footprint in India, where an abundant pool of high-tech engineers co-exists with an army of low-cost English-speaking workers who deliver back-office services.

FutureSoft, which has 600 employees, expects to close the year to March 2005 with a net profit of $3.5 million on a revenue of $23 million, up from a profit of $700,000 on a revenue of $15 million in the previous year, Ramani said.

The FutureSoft deal was concluded during a low-key visit this week to India by Flextronics Chief Executive, Michael Marks.

Ramani, who recently gave away his 6 percent stake in Hughes Software worth about 1.0 billion rupees to charity, holds about 55 percent in FutureSoft.

Private equity arms of chip-maker Intel and India's Infrastructure Leasing and Financial Services Ltd (IL&FS) hold 13 percent each.