The acquisition of Lodestone, a Zurich-based management consultancy firm that advises clients on strategy and on business management software from SAP
Investors have criticised Infosys for its aversion to acquisitions despite holding nearly $4 billion in cash, and its inability to make progress in consulting to compete with rivals IBM
The $7 billion company, which symbolises India's rise as an outsourcing powerhouse, has struggled this year. It has missed its sales targets, lost market share to local rivals, put off an annual pay rise and seen its stock battered.
Infosys Chief Executive S.D. Shibulal said the acquisition was part of the company's new strategy, under which it will focus more on higher-margin software and consulting and less on basic outsourcing services.
The acquisition will also boost Infosys' presence in Europe, its second-largest market after the United States, he said.
Infosys plans to conclude the all-cash deal by October, the Bangalore-based company said, adding it was not changing its annual revenue guidance for the current fiscal year to March 2013 as a result of the acquisition.
Shares in Infosys, which the market values at $25.5 billion, rose as much as 1.2 percent during the day. It was trading up 0.2 percent at 0859 GMT. Some analysts said that the immediate financial impact of the acquisition was likely to be limited.
UNUSED CASH BALANCE
The deal values Lodestone, whose top clients include German carmaker BMW
Excluding the Lodestone deal, the total value of Infosys' completed M&A transactions is about $398 million, compared to more than $1 billion for bigger rival Tata Consultancy Services
In 2008, Infosys announced a $700 million-plus bid for British consulting firm Axon, but dropped out of the race after smaller domestic rival HCL Technologies
"We have lot of appetite for buying companies which will fit our strategic needs," CFO Balakrishnan said. "It's not just acquisition, internally there are a lot of steps that we will take to achieve high-quality revenue growth in the near future."