TCS acquires French IT services firm Alti for Rs 530 Crore

BANGALORE: Tata Consultancy Services has bought French technology services company Alti SA for over 75 million euro (Rs 530 crore) in a deal aimed at giving India’s largest software company an extra edge in the crucial European market. The all-cash deal will help TCS win more business from corporations in markets such as Germany and France as they slowly warm up to greater offshoring to cut costs, analysts said.

“This acquisition underlines our long-term, strategic commitment to France, which is the third-largest IT services market in Europe. The acquisition of Alti SA will help us serve our clients in France and across Europe more comprehensively with an expanded set of services and solutions,” said N Chandrasekaran, TCS managing director and chief executive officer. Shares of TCS ended 1.1% up atRs 1497.30 on the Bombay Stock Exchange, whose benchmark Sensex index fell by 1.15%.

France represents an opportunity of about 30 billion euro, according to TCS. After the US, Indian IT companies earn the most revenue from Europe. However, they have been unable to make sufficient inroads into markets such as Germany and Europe because of cultural and language barriers. According to sourcing advisors, none of the Indian IT companies is ranked among the top 20 in either of those markets.

Alti, which has about 1,200 employees, counts Banque de France ( French central bank), BNP Paribas, Crédit Agricole, and Société Générale among its clients in banking sector besides others such as Air France, L’ Oreal and telecom company Orange.

“This is a good move that will help TCS increase its visibility in those markets and win some large accounts, especially in the financial sector,” said Biswajit Banerjee, senior analyst at Pierre Audoin Consultants, a French consultancy and market research firm.

Last year, Infosys acquired Swiss consulting company Lodestone for $350 million (Rs 1,900 crore) while Cognizant Technology Solutions Corp acquired six small IT services companies that were part of Germany’s C1 Group for an undisclosed sum. Europe contributed a little under 30% of India’s $76 billion software services exports in the year to March 2013, with most of it coming from the UK and the Nordic region.

TCS has been operating in France since 1992 and earns roughly 27% of its $10.2 billion revenue from the Europe market.