Long-term goal is to cut down on US dependence.
By R. Chandrasekaran
CHENNAI: India’s biggest software service provider Tata Consultancy Services is extending its presence in Europe by agreeing to acquire France-based Alti SA for Euros 75 million. The acquisition comes at a time when the global market is reeling under uncertainty, despite a unanimous view that the year 2013 may be better than last year as far as IT spending is concerned.
The acquisition is also aimed at reducing the dependence on the U.S. for growth opportunities. It is no secret that most of the Indian IT companies generate a minimum of half of their revenues from the largest economy in the world. The great recession in 2008 – 2009 in the US has alerted the Indian IT companies to scout for an alternative source for generating revenues.
Though TCS has been present in France since 1992 servicing more than 50 clients, the company’s latest acquisition assumes importance as it is the third biggest market in Europe. Britain and Germany continue to remain the top two markets in the region. The third largest European IT services market is valued at around Euros 30 billion. TCS has been investing significantly in France in the last half a decade and strengthened itself by hiring domestically too. To honor these initiatives, Greater Paris Investment Agency conferred TCS a special award for its investment and innovation, last year.
The current acquisition of Alti SA fits well with TCS’ strategy of expanding its presence in the Europe. Alti has a workforce of 1,200 spread over in France, Belgium and Switzerland generating revenue of 126 million Euros. The company, which is a privately-held one along with two private equity fund operators, is servicing banking, luxury, manufacturing, financial and utilities sectors and is ranked one among the biggest five system integrators of enterprise solution provider.
Commenting on the acquisition, TCS CEO and managing director N Chandrasekaran 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, bringing the best of TCS to French corporations. I am confident that this acquisition will help us accelerate our growth and presence in France.”
While this acquisition will not significantly reduce the dependence on the U.S. immediately, this could set a stage for more buy outs in the days to come so as to cut down the dependence on the U.S. to below 50 percent level, which is what every IT company is aiming to achieve in the near future.