French IT major Atos to acquire Syntel for $3.4 B

The acquisition will leverage India talent pool as Syntel has 18,000 Indian employees while Atos has been in the present in the country since 1991.

Atos, the European IT services company headquartered in Paris, France will acquire Syntel, the Nasdaq listed IT services firm founded by Bharat Desai, in a deal valued at $3.4 billion. This transaction will have a bearing on India, as both companies have sizeable headcounts in the country.

According to a press release, the acquisition would expand Atos’s capability in the North American market, especially in the banking, finance & insurance verticals. Syntel generates a significant amount of revenue from the BFSI vertical and is engaged with leading global banks.

Thierry Breton, Chairman and CEO, Atos said, "I am very proud to announce such an important milestone in Atos’ leadership development with the acquisition of Syntel, a leading digital company, established 38 years ago, that perfectly fits our strategic priorities. It represents a transformational step for our business & platform solutions division as it will significantly enhance its growth and profitability profile through an extended digital services offering, cutting-edge India-based delivery platforms, as well as revenue and cost synergies.”

Bharat Desai, Co-Chairman and Co-founder of Syntel, said, "This is a very exciting development for Syntel. The Syntel board is committed to maximising shareholder value and believes that the agreement with Atos achieves that objective and delivers a win-win proposition to our customers and employees.”

Syntel, which started its operations in 1980, has a workforce of 23,000 people globally, of which around 18,000 are based in India. Syntel’s India operations was launched in 1992 and it has centres in Mumbai, Pune, Chennai and Tirunelveli. The company generated a revenue of $924 million in 2017, of which 89 percent was in North America with a 25-percent operating margin.

Atos has been in India since 1991 and has its presence across six locations – Mumbai, Pune, Bengaluru, Chennai, Gurgaon and Kolkata. This French group generated a revenue of €12.7 billion for the year 2017 and reported a global headcount of 97,267.

Atos, in a statement, said, “This transaction is a major step in the strategy of Atos to reach a global scale and significantly expand in both digital services and business & platform solutions. The two organisations are fully complementary in their customer base, geographies, and services.”

Global IT services companies have been leveraging India's geography to tap into the talent pool and also increase their profitability. Atos is the second French company after Capgemini to acquire an IT company that has a large base in India. Capgemini acquired iGATE in 2015.