Capgemini has confirmed that it has agreed to acquire Indian technology services firm iGATE for US$4 billion in a deal that will make the French company one of the biggest IT outsourcing service providers in North America.
The merger will take Capgemini’s total headcount to 190,000, with analysts estimating the combined company’s revenue at $13.5 billion.
The French company claimed in a press release that the merger will strengthen its application and infrastructure services as well as BPO and engineering services. Moreover, the deal enriches Capgemini’s portfolio with new flagship clients such as General Electric and Royal Bank of Canada.
Founded by Sunil Wadhwani and Ashok Trivedi, iGATE has employed more than 33,000 people.
North America is iGATE’s largest market, representing 79% of revenue in 2014, followed by Europe (14%) and Asia-Pacific (7%). The merger increases the group’s revenue by 33% in North America alone, with the company planning to earmark 50,000 of its employees to service North American clients.
iGATE’s North American operation includes its $2 million delivery center in Guadalajara, Mexicom as well as an office in Queretaro, which came into its fold following its acquisition of Patni Computers in 2011.
iGATE has large clients in North America’s financial services sector, which accounts for 42% of the company’s revenue. Analysts say the merger will also reinforce Capgemini’s position in the retail, manufacturing and healthcare sectors, besides adding some important cloud platforms to its offerings.
“The combination of iGATE and Capgemini provides cross selling revenue synergies of $100-150 million and annual efficiency gains estimated at $75-105 million to be achieved within 3 years,” Capgemini said, adding that it will leverage iGATE’s technology solutions to accelerate the “people supply chain” transformation.
“We are pleased to have found a great partner for the business and are confident that our employees and customers will benefit from the enhanced service offerings and resources available to them at Capgemini,” said Ashok Trivedi, Co-Founder of iGATE.