Cognizant Tech to buy T-System's India business

Cognizant Technologies, the Chennai-based software solutions company, said on Tuesday that it would acquire the Indian operations of Deutsche Telekom's enterprise customer subsidiary, T-Systems, this month.

Under the terms of a five-year systems integration partnership with T-Systems, the takeover of T-Systems' Indian operations would enable Cognizant to grow its offshore operations, the company said.

The share purchase of T-Systems' Bangalore and Chennai operations will be concluded at the book value.

T-Systems India and its approximately 1,150 employees in Pune and Bangalore would become Cognizant employees, R Chandrasekaran, president and managing director, Cognizant, said.

Cognizant did not disclose the exact share acquisition terms. "In addition to the immediate offshore revenue from re-badging of T-Systems India employees, we expect the partnership to generate material revenue from both growing our offshore operations to support T-Systems' existing clients as well as revenue resulting from jointly winning new clients. In aggregate, we expect to generate at least $40 million in the first year of the partnership," Chandrasekaran said.

Cognizant expects the T-Systems India business to double in the next one year, based on business commitments and emerging opportunities.

T-Systems is an EURO12 billion company with 56,000 employees, and has strong competencies in infrastructure management and systems integration services.

The partnership between both the companies is primarily aimed at gaining joint access to large European, American and Asian customers, and catering to European corporations with global delivery requirements for systems integration services.

"This alliance will enable us to gain access to strong front-end capability in the German market as well as large European customers by leveraging T-Systems' strong onshore systems integration platforms in Europe. Cognizant will also gain access to industry expertise in key segments such as automotive and telecommunications," he said.

The new alliance would draw upon a combined talent base of over 110,000 employees worldwide, comprising more than 40,000 employees working offshore, Chandrasekaran said.

Reinhard Clemens, the management board member for business customers at Deutsche Telekom and CEO of T-Systems, added in a statement on Tuesday that the agreement with Cognizant would be free of the integration pains, which traditional acquisitions were normally subjected to, while at the same time fostering growth for both the companies.