April 09, 2013, 2:20 AM — Tata Consultancy Services is to acquire French IT services company Alti in a bid to increase its presence in the European market.
India's largest outsourcer said in a filing Tuesday to the Bombay Stock Exchange that it has signed definitive agreements to acquire 100 percent of the equity in privately-held Alti for €75 million (US$97.5 million) in an all-cash transaction.
The deal will help it grow in France, regarded as the third largest IT market in Europe after the U.K. and Germany, TCS said in the filing.
Alti's key customers include French companies in banking, financial services, luxury, manufacturing and utilities sectors. It has 1,200 employees across France, Belgium and Switzerland, and had revenue of €126 million in 2012. The company is currently owned by its management and two private equity firms.
This deal holds promise as it could give TCS access to a new set of customers and staff skills, and enable it to increase local delivery of services in France and Belgium which are important markets for outsourcing, said Sudin Apte, principal analyst and CEO of research and advisory firm Offshore Insights.
Indian outsourcers are expanding in Europe, the second largest market for them after North America.
Competitor Infosys acquired in the fourth quarter of last year Lodestone Holding, a management consultancy firm in Zurich with skills in the area of SAP software, as it also tries to build up its presence in Europe, a market that is increasingly driven by the ability to deliver services from locations within the continent.
In business transformation and systems integration services in particular, local delivery has become important, Apte said.
The investments come as Indian outsourcers are beginning to see a recovery in the offshore outsourcing business. TCS' fourth-quarter revenue increased by 14 percent year-on-year to nearly $3 billion for a net profit of $652 million.
The transaction is subject to customary closing conditions.