Mumbai, April 27 2015:France-headquatered leader in IT services and solutions – Capgemini -- is to acquire New Jersey( US)-headquartered, and Indian-founded and talent-fuelled technology solutions provider IGATE in a $ 4 billion deal.
The acquisition is widely seen as answering Capgemini's need to expand its presenced in North America. The combination of IGATE and Capgemini increases the Group’s revenues in the region by 33% to an estimated $4 billion, making North America its first market, rather than Europe as hitherto.
IGATE brings with it, key clients like General Electric and Royal Bank of Canada. The combined Group will pass the 100,000 employees landmark in its Rightshore delivery centers in 2015. Capgemini alone has a strength of over 40,000 in India. IGATE employs 33,000 worldwide. Together the combined entity will have some 70,000 India based employees -- almost 48%of their global work force. The two companies have their main India operations and development centres within a few hundred metres of each other in Whitefield, Bangalore.
Says Paul Hermelin, Chairman and CEO of Capgemini: “ IGATE is a leading company that perfectly fits our strategic ambition. It will give us a new status on the American market, and take further our industrialization journey to offer ever more competitive services to our clients. This will also give to the Group’s Indian operations a new scale, allowing us to compete on par with the best US-based and Indian-based companies."
Adds Sunil Wadhwani, Co-Founder and Co-Chairman of IGATE: “We are gratified that the company we founded over 25 years ago has developed into a global enterprise with over 30,000 employees, a trusted partner to over 250 clients, a market value of over $4 billion, and one of the most respected brands in the IT industry.”
And Ashok Vemuri, CEO of IGATE says: “In Capgemini, we have found a partner that will advance our ability to innovate and build industry solutions that will enhance the value proposition we bring to our clients. In addition, this powerful combination will provide exciting opportunities for our employees to expand their capabilities.”
With its established position in the financial services sector (42% of revenues), IGATE brings an attractive portfolio of major clients complementary to those of Capgemini. This transaction also reinforces Capgemini’s position in the retail, manufacturing and healthcare sectors, and prompts a faster transition to platform-based solutions.
Comments Partha Iyengar, Gartner Vice President and Head of Research – India: Capgemini has been investing in creating a more compelling global delivery offering, starting with the Kanbay acquisition earlier. However, compared to their other ‘global global’ peers, Accenture and IBM, they were still a distant third in this capability, and compared to the global Indian providers were even more behind. This acquisition, in one fell stroke, levels the playing field to a large extent both in terms of capacity as well as breadth of coverage areas and industry verticals. The added bonus for Capgemini is that it gives them, again in one move, a great presence and foothold in the US market, which has always been a challenge for them as a Europe centric provider. This boosts their presence and revenue in the largest market for global sourcing and gives them a credible offering for the US market. The biggest challenge and hurdle ahead of them is the multi-cultural integration task that lies ahead. They will have to move very quickly to convince clients that projects are safe and that the Cap acquisition gives IGate clients a much bigger capability and deeper domain expertise in some domains (which it does). If they are not successful in doing this, they risk the flight of clients, especially in the US.