Infosys To Buy 122-Person Oil And Gas Partner For $70M

Infosys will spend $70 million to purchase an information management consultancy that can bring next-generation data analytics to oil and gas clients.

The $8.7-billion Bangalore, India-based outsourcing giant said its acquisition of Noah Consulting, a 122-person solution provider based in Houston, should make it possible to provide oil and gas firms around the globe with end-to-end data management services covering everything from exploration to production.

"Our oil and gas clients are adjusting to a new normal of lower oil prices," Sanjay Purohit, executive vice president and global head of Infosys Consulting, said in a statement. "There is an urgency to improve the efficiency and effectiveness of their operations in a safe and reliable manner."

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The Infosys-Noah marriage will make it possible to use information management to integrate supply chain and financial data with operational and technical data, an industry challenge that has never been addressed effectively, according to John Ruddy, president of Noah Consulting. Clients can benefit from Noah's deep domain expertise, proprietary methodologies and solution accelerators, the company said.

The all-cash acquisition is expected to close by the end of 2015, according to Infosys, whose stock fell 0.7 percent to $17.92 per share just before the close of trading Monday after the news was announced earlier in the day. Neither Infosys nor Noah Consulting responded immediately to a request for additional comment.

"The upstream oil and gas industry is facing unprecedented challenges that demand faster and better ways of achieving return on investment," Rajesh Murthy, Infosys's executive vice president and global head of energy, communications and services, said in a statement. "With this acquisition, we are uniquely positioned to offer end-to-end data management services to oil and gas companies globally."

Noah was founded in Houston in 2008, opened a second office in Calgary, Alberta in 2010 and hit the 100-employee threshold in 2013. The solution provider works with the super majors – Aramco, BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Shell and Total – independents and oil field service companies to plan, architect and deploy information solutions.

Noah Consulting focuses on the following areas: information management, which includes content management and data virtualization; strategic services, which includes service-line definition and value assessment; industry solutions, which includes process design and project information management; and analytics, which includes business intelligence and SAP HANA.

Although Infosys is based in India, the 187,000-person company drew 63.3 percent of its sales from North America in the quarter ending Sept. 30, according to data released by the company. Energy and utilities are a relatively small practice for the solution provider, accounting for just 4.7 percent of all sales in the most recent quarter, according to company data.

Nearly two-thirds of Infosys' revenue stems from business IT services such as application maintenance, application development and testing services, while a third comes from consulting and package implementation. Infosys' largest verticals in the most recent quarter were banking and financial services, manufacturing and retail, according to the company.

Infosys is also the single largest user of skilled worker visas, with the company applying for 23,759 H-1B visas in 2014 and 23,057 in the first half of 2015, according to U.S. Office of Foreign Labor Certification. The solution provider offered its H-1B applicants a median annual salary of $72,300 in 2014, well below the solution provider average of $88,468, according to a CRN data analysis.

Infosys has found itself in hot water in recent years regarding its use of foreign worker visas, with the U.S Department of Labor launching an investigation in June into both Infosys and competitor Tata Consultancy Services, No. 4 on the CRN Solution Provider 500, to see if they violated labor rules by replacing employees who were working with utility company Southern California Edison with H-1B workers.

Both companies told CRN in June that they're fully compliant with U.S. immigration laws and are cooperating with the government's request for information.

Infosys also paid the U.S. government $34 million in October 2013 to settle allegations that the company was having employees with B-1 visas perform actual labor. B-1 visa holders are only allowed to visit the U.S., participate in meetings and negotiate contracts. Holders of H-1B visas can perform labor.

PUBLISHED OCT. 19. 2015