Infosys aims big in back-office unit

Anshuman Daga

BANGALORE: Indian software giant Infosys Technologies Ltd. will hire 250 to
300 staff in the first year for its new back-office unit, signaling a big foray
in a high-growth area, a senior official said.

"Our first 90-120 day goal for Progeon is to add a couple of customers
and build up the senior management team," Phaneesh Murthy, global head of
sales at Infosys, told Reuters in a telephone interview on Wednesday.

Progeon, Infosys' back-office firm, on Tuesday secured $20 million in funding
from Citigroup Investments, an arm of Citigroup, in return for a minority stake.
Analysts said the Citigroup funding could imply that the No. 1 US financial
services giant would give business to the unit.

"We feel hopeful that we would get business from Citigroup as we now
have channels opened for us," said Murthy, who will be on Progeon's board
along with two other senior company officials. Infosys, India's No. 2 software
exporter, last week unveiled plans to invest $5 million in the new venture,
which will currently operate out of Infosys' facilities in Bangalore.

"You always have to look to de-risk investment, leverage the brand name
and raise capital at a reasonable valuation," Murthy said, when asked why
Infosys got outside funding for Progeon despite sitting on a cash pile of $210
million.

He said Infosys will announce Citigroup's stake size in Progeon in two to
three weeks. Market sources estimate Citigroup's stake in the venture at about
20 per cent. Nasdaq-listed Infosys hopes to leverage its relationship with its
300-odd global clients to win business for Progeon.

Citigroup has a significant minority stake in e-Serve International, an
Indian IT-enabled services company and Indian financial software firm i-flex
solutions, which has filed for a keenly-awaited initial public offering.

Infosys is part of a growing list of Indian software firms jumping into
remote processing services like financial claims processing and payroll
processing for global firms to buttress slower growth from the main software
services business.

"We are looking at financial services companies doing their core
processing services from us," Murthy said. "We would become a one-stop
shop for global services. Infosys's 10,500-strong workforce are split almost
equally between India and at client sites abroad.