Axon, a little-known IT services company, has become the latest British business to be snapped up by a fast-growing Indian rival.

Infosys, one of the world’s biggest outsourcing companies, said yesterday that it had bought Axon in a £407 million acquisition that hands £44 million to Mark Hunter, Axon’s founder and former chairman.

It marks the first takeover in Europe by Infosys and is the latest sign that increasingly confident and cash-rich Indian companies are spreading their wings.

In 2002, there were only three takeovers of foreign competitors by Indian companies. This rose to 15 by 2004. Three years ago, Apeejay Surrendra, whose interests range from tea and retailing to property and finance, bought Typhoo for £80 million. Tata, the conglomerate, followed up the acquisition of Corus Steel in 2006 with the £1.1 billion takeover of Land Rover this year. Experts believe that the pace of Indian acquisitions will only gather momentum.

Kris Gopalakrishnan, the chief executive of Infosys, told The Times yesterday: “A lot of Indian companies are looking at Western Europe. This is our first acquisition [there] and right now our focus is to make sure that this process goes through before we talk about where we go next.”

Infosys and Axon are among two dozen companies worldwide that implement back-office software systems designed by SAP, the German software group.

Axon was set up by Mr Hunter in 1994 after he left his job with SAP to create a team of IT specialists. The company floated in 1999 and today generates more than £200 million a year from its base in Egham, Surrey. Its customer base includes Kraft Foods, BP and Microsoft, as well as public sector clients such as Transport for London and Wolverhampton City Council.

Infosys is paying 600p a share, a premium of 19.4 per cent to Axon’s 502½p closing price on Friday. The price includes any dividend declared in Axon’s half-year results, which are due today. The company’s shares have fallen by nearly 50 per cent in the past year amid fears that its clients will begin to shelve project work in the tougher economic climate.

Mr Gopalakrishnan insisted that there was still strong demand for SAP systems, with Infosys registering a 62 per cent increase in orders in the past year. He added that the deal would allow Infosys to compete more effectively on the international stage with rivals such as Accenture, Oracle and Cap Gemini. Around half of Axon’s revenue comes from the United States. “Our rationale was that with this acquisition, our global reach, scale and our ability to participate in large transformational deals would be significantly enhanced,” he said.

Mr Gopalakrishnan was one of seven engineers working in Bombay who in 1981 decided to set up their own business. It took 23 years for Infosys to reach $1 billion of revenue, but only another two years to double it to $2 billion - a landmark that the group achieved in 2005. It went public in 1993 and became the first Indian company to gain a Nasdaq listing.

Roy Merritt, the chairman of Axon, said: “Against the background of the global economic environment and increasing consolidation in the IT services industry, the combination with Infosys represents a compelling proposition.”

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