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Infosys Banks on AI with Acquisition of Enterprise Automation Startup Panaya

India-based software and services giant Infosys (NYSE:INFY, BOM:500209) has announced the acquisition of enterprise automation startup Panaya, in a deal that values the US-based startup at $200 million. This investment is in line with the strategic thrusts of Infosys’ new CEO, Vishal Sikka, who aims to incorporate better use of automation and artificial intelligence in accomplishing repetitive tasks for client-based projects.

At its core, Panaya is a SaaS platform that enables enterprises to automate the testing process for managing their enterprise resources planning (ERP) software updates — Oracle EBS, SAP and SalesForce — particularly tracking potential pain points and coding issues, then making recommendations for fixes. However, the potential is greater. “The acquisition of Panaya is a key step in renewing and differentiating our service lines,” says Sikka in announcing the acquisition. “This will help amplify the potential of our people, freeing us from the drudgery of many repetitive tasks, so we may focus more on the important, strategic challenges faced by our clients.”

A $42.5 billion company, Infosys has been facing challenges in growing its business in the wake of Sikka’s ascent as CEO and managing director, after stepping down from his post as head of technology at German enterprise software giant SAP. The firm faces management churn and high attrition rates among its 160,000 staff globally, even as it is the second-largest IT outsourcer in India. The Panaya acquisition is thus more of an intellectual property acquisition than one of customer or data. By incorporating enterprise automation, Infosys can potentially improve the efficiency of its business services that range from banking, finance, manufacturing and other industries.

Prior to acquisition, Panaya has raised $59 million in at least six funding rounds, so far, with a $20 million Series E round announced in January 2015. For its part, Infosys has expressed interest in acquiring Europe-based technology firms to bolster its presence in the region, which is considered to be a difficult market for the Bangalore-based company, with high language and cultural barriers.

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