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iGate-Capgemini Deal: What it Means For TCS, Infosys

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iGate-Capgemini Deal: What it Means For TCS, Infosys
French IT major Capgemini on Monday announced a $4 billion deal to acquire its US-based rival iGate, whose 75 per cent employees are currently based in India.
 

Here's how the deal may impact domestic outsourcers:


1) Together, iGate and Capgemini would become a formidable entity in the outsourcing space, with combined estimated revenue of $13.58 billion in 2015. Among Indian outsourcers, only TCS with sales of $15.5 billion in 2014-15, comes close to the combined entity in terms of revenues.


2) iGate and Capgemini would together employ around 1.90 lakh employees; nearly 48 per cent of them would be based in India. That's more than 1.76 lakh employees Infosys employs currently.


3) Post iGate's acquisition, the key market of North America would contribute 30 per cent to Capgemini's revenues as compared to 22 per cent now. Indian outsourcers get 60-75 per cent of their revenues from North America.


4) iGate's acquisition would help Capgemini emerge as a key competitor in the high-margin financial services segment, where Indian outsourcers such as Infosys have traditionally had an edge. iGate gets 42 per cent of its revenues from financial services segment.


5) In Europe, where Indian IT companies are looking to penetrate and gain market share from local names, Capgemini with its expanded offshore presence can compete more aggressively post iGate's acquisition. However, the combined entity would not be a threat to frontline Indian IT companies in US, where along with Accenture, Indian outsourcers are well entrenched, said Nomura.

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