Infosys Pads SAP Consulting Business

SAN FRANCISCO -- A move by Infosys(INFY Quote) has merged two prominent integrators of SAP(SAP Quote) software.

Bangalore-based Infosys announced Monday it will buy U.K.-based Axon Group for 407.1 million pounds, or $753.1 million in cash. The deal is expected to close in November.

American Depositary Shares of Infosys were down $1.37, or 3.3%, to $40.19 in recent trading.

Axon, which has been growing lately by acquisition of small U.S.-based consulting firms, adds an estimated 2,000 employees to Infosys's SAP consulting practice.

Traditionally, integration of Oracle(ORCL Quote) business applications was Infosys' key focus, according to Eugene Zakharov, analyst with Technology Business Research.

Infosys has some 3,500 consultants on the Oracle side, he says. It also has a smaller, standalone SAP practice.

But significant and fast-growing demand for SAP applications has spurred Infosys to add to its capabilities, Zakharov adds.

Axon's strong suit has been building expertise in verticals such as travel, utilities, and chemicals and high-tech manufacturing -- industries complementary to those where SAP has focused, says Alex Soejarto, analyst with Gartner.

This acquisition in the consulting space helps the company provide more local consulting capability in those regions where Axon has created a presence, including the U.S., Soejarto says.

In 2007, Axon posted a profit of $37.4 million on revenue of $378.3 million. Infosys had revenue of $4.2 billion for the year ended in March.

The acquisition is unusual for Infosys, which has been "historically thoroughly conservative with their acquisitions," notes Zakharov. Its largest prior deal was for about $250 million.