Infosys to bid for US healthcare company Trizetto

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BANGLORE:  Infosys CEO Vishal Sikka has on a couple of occasions in recent weeks dismissed Trizetto, the US healthcare solutions company that  Cognizant acquired last month for $2.7 billion, as yesterday’s technology.But multiple sources told TOI that Infosys was among the aggressive bidders for the company, though clearly not as aggressive as Cognizant.

Infosys’ senior management is said to have spent considerable time pursuing a deal with Trizetto, but pricing became the eventual barrier.When TOI asked Infosys about it, the company said, “We won’t be commenting on your query.” TOI has also learnt that other IT services providers including TCS, Accenture and  Wipro also looked at the deal.

For analysts, Infosys’ Trizetto bid signals a shift in its M&A strategy. “It demonstrates an appetite for large ac quisitions in newer areas like healthcare that’s becoming the `new financial services’ for ITBPO companies,” said an analyst, who did not want to be named.The US Affordable Care Act, which makes it necessary for payers (insurance companies) and providers (hospitals) to reduce cost and deliver quality services, is a huge opportunity for IT services companies. Healthcare contributes about 2% to Infosys’ revenues.

Trizetto has over $700 million in revenues. Cognizant and Trizetto combined will have more than $3 billion in healthcare revenue, and serve nearly 245,000 healthcare providers, as well as about 350 payers with approximately 180 million covered lives in the US. Phil Fersht, CEO of HfS Research, described the acquisition as the most significant and sizable yet by an Indian IT service provider. “It paves the way for how we expect future services growth to take shape.In short, Cognizant wants to provide complete BPaaS (business process as a service) for healthcare clients and recently won HealthNet in a major IT and BPO deal. Now the firm owns technology that’s proven and can look to challenge the likes of Accenture at the forefront of the healthcare ITBPO services industry,” he said.

However, Sikka, when asked about the acquisition recently had said, “We wish them (Cognizant) the best on that. We at Infosys look at acquisitions that bring us unique skills, capabilities and technologies that help us to go into the areas that we find strategic for our future. We are not interested in acquiring a pre vious generation company no matter how big or small. We would rather focus on the future.”

Analysts, however, think pricing could have been a barrier for Infosys, even though it’s sitting on a cash pile of $5.4 billion. “It’s quite possible Infosys did not want to pay the price that was required to win. I have no doubt that at a lower price they would have wanted it,” said Peter Bendor-Samuel, CEO of IT research and advisory firm Everest Group.

Trizetto is also an Infosys and Wipro partner; the latter two use Trizetto solutions to service their healthcare clients. Bendor-Samuel said Infosys has a significant exposure to Trizetto, much more than Wipro. “My sense is it is around 10-15% of their payer-provider revenues,” he said. That would have been another reason why Infosys would have wanted Trizetto.

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