Indian outsourcer Tata Consultancy Services has acquired a 75% stake and management control of Swiss banking software and services provider TKS-Teknosoft SA for 100.5 million Swiss francs ($80.5 million).
The majority stake in TKS-Teknosoft will help TCS expand its portfolio of products for the banking and financial services market, besides giving TCS a direct presence in key European markets like Switzerland and France, according to N. Chandrasekaran, TCS’ executive vice president and global head of operations, who spoke on a conference call Tuesday.
TCS of Mumbai has a long relationship with TKS-Teknosoft, which has included the delivery of services from India to customers of the Swiss company. The company may move a part of TKS-Teknosoft’s product development as well to India, Chandrasekaran said.
As part of the transaction, TCS has acquired TKS-Teknosoft’s Alpha, a product for the private banking segment, and e-Portfolio, its product for the wealth management market. TCS plans to integrate these products with its own products for the banking and financial services industries, Chandrasekaran said.
The acquisition also brings to TCS 115 staff from TKS-Teknosoft with extensive experience in European markets, said S. Mahalingam, CFO of TCS.
In 2005, TKS-Teknosoft earned revenue of 71.5 million Swiss francs and net income of 9.6 million Swiss francs. The revenue came mainly from IT services, though products also accounted for a significant portion, Mahalingam said.
A number of TCS’ competitors, including Wipro and Infosys Technologies, are expanding in Europe, as they believe that customers there are now more willing to offshore work to India. Europe accounted for 28.5% of TCS’ revenue in the quarter ended Sept. 30, though most of it came from the United Kingdom.
The investment in TKS-Teknosoft will bring to TCS $40 million in additional revenue annually, Chandrasekaran said. TCS will consider acquiring the balance stake in TKS-Teknosoft down the line, he added.
