Payments giant Fiserv has agreed to sell its systems integration services unit and Costa Rica operations to Infinite Computer Solutions, the companies said in a joint statement emailed to Payments Dive.
As part of their pact, the global technology company Infinite will “continue providing various product delivery, professional and technology services across multiple Fiserv business lines,” the companies said in Friday’s statement. Fiserv says it has more than 500 “associates” in Costa Rica alone.
“Fiserv is pleased to partner with Infinite as they expand their operations in new and existing geographies,” the statement said. “As part of evaluating our business portfolio, Fiserv determined that Infinite is well-suited to lead these businesses into the future,” the statement added.
Fiserv spokesperson Ann Cave declined to comment on financial terms of the deal. She also declined to comment on how many Fiserv employees will be impacted by the transaction.
The sale comes as Brookfield, Wisconsin-based Fiserv is seeking to shore up sagging profit margins for the year. Fiserv told analysts in July that margins for the year would be lower than previously expected, though the company anticipated them improving in the second half.
The transaction is likely to further pare Fiserv’s workforce. The company has shed employees in recent weeks, following worker cuts earlier this year that have added to severance expense.
Cave has declined to comment on the number of Fiserv employees dismissed this year, maintaining that the company has “about 44,000 employees” globally. That’s the figure the company disclosed in Fiserv’s annual report to the Securities and Exchange Commission in February, pegging the count to the end of last year.
With revenue growth projected to slow in 2023, cost-cutting initiatives such as those at Fiserv are likely to become “more mainstream in conversation” over the next 12 months, said Oppenheimer & Co. analyst Dominick Gabriele. He said that also applies to payments companies Fidelity National Information Services (FIS), Global Payments, Visa, Mastercard, PayPal and Block.
“As growth slows and the FX headwinds really kind of take hold, you have less margin expansion,” Gabriele said Monday. To achieve that profit margin expansion as growth stalls, “you would need to cut some expenses,” he added.
Another analyst also suggested Fiserv’s sale of those units was geared toward improving profit margins. “It’s foreseeable that they would do this to improve revenue growth and margin progression,” said David Koning, analyst with Baird Equity Research, in an email.
Payments companies are bracing themselves for the next leg of the economic cycle, Gabriele said, and that means Fiserv and its peers “may try to focus on their strongest market positions versus more ancillary opportunities.”
For Fiserv, that likely means focusing on areas of strength, such as its merchant operating systems Clover and Carat, and “selling off less profitable businesses, slower growing businesses, non-strategic businesses,” Gabriele said.
The SIS unit provides IT services such as systems integration, cloud and infrastructure assistance, cybersecurity and automation services for clients undergoing digital transformation, according to Fiserv’s website.
Infinite, founded in 2001, is a technology provider with about 10,000 employees, according to its website. While Infinite identifies its global headquarters as Rockville, Maryland, a list of the company's offices also suggests it has major operations in Bangalore, India.
Fiserv has operations in two locations in Costa Rica, Barreal de Heredia and Tres Ríos de Cartago, the company says on its website. It established a presence there in 2004 with 10 employees; today it has more than 500 employees in the country, according to that web post regarding its Latin America operations.
“While our associates work across a variety of disciplines, software and application development are core to our business operations here,” the site said regarding the Costa Rica operations, which appear to be an anchor for the region.
In 2016, the company expanded in Costa Rica and expected to add about 400 employees to the 550 it had there at the time, according to a post on the website of CINDE, Costa Rica’s “investment promotion agency.”
