Tuesday, April 28, 2015

IT Consulting Giant Capgemini To Buy IGATE For US Expansion Move

Paris-based IT consulting and outsourcing firm Capgemini has made a bold move. The IT services provider announced plans to acquire IGATE, a major US competitor based in Bridgewater, New Jersey, for $ 4 billion or $48 per share. 

The all-cash deal between the two tech companies will result in an enlarged multinational company with an estimated combined revenue of $13.6 billion (2015) and a combined workforce of about 190,000 employees.

The deal would expand Capgemini's presence in North America market and help both companies challenge tech giants such as Accenture and IBM for a larger slice of North America market share. The deal also strengthens Capgemini's global reach in key businesses such as applications and infrastructure services, business process outsourcing and engineering services. 

North America is the most largest and innovative market for IT services. And its the single biggest reason why Capgemini is looking for an expansion of its presence in North America market. Paul Hermelin, Capgemini CEO, said in a statement: “It will give us a new status on the American market.” and added that: “We were mainly looking at a US acquisition. It is a vibrant market.” 

North America is by far IGATE's largest market, almost  80 percent of IGATE's $1.3 billion revenues comes from this region, followed by Europe at 14 percent and Asia Pacific region at 7 percent. IGATE also has a large presence in India market, where around 60 percent of its 33,000 workforce work.

In addition, the deal also broadens Capgemini's industrialized delivery model globally and strengthens Capgemini's client base with existing IGATE customers, which include General Electric and Royal Bank of Canada.

Based in Bridgewater, New Jersey, IGATE has a revenue of $1.3 billion, a double-digit growth and a global workforce of around 33,000 people. 

Headquartered in Paris, France, Capgemini is a French multinational management consulting company. Capgemini is one of the largest consulting, outsourcing and IT services companies with almost 145,000 employees worldwide. It has regional operations in North America, south America, Europe and Asia Pacific region. 

Image Credit: BusinessInsider

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