Plans are underway to for French IT server company Capgemini to acquire leading Indian IT company iGate in a $4 billion deal. This deal will mark the merger of two of the largest IT companies in the world with networks worldwide. This merger which will unite both the companies under one banner has the potential to increase their ability to compete with the other IT giants based in the US and India. “I am very pleased to announce a very important transaction in Capgemini’s history. IGATE is a leading company that perfectly fits our strategic ambition. It will give us a new status on the American market, and take further our industrialization journey to offer ever more competitive services to our clients. This will also give to the Group’s Indian operations a new scale, allowing us to compete on par with the best US-based and Indian-based companies”, said Capgemini Chairman and CEO Paul Hermelin.
While iGate has had annual revenues of over $1.2 billion, the merger will have the potential to deliver the revenue of a whooping €12.5 billion a year with a compliment of over 190,000 employees providing service, according to the press release by Capgemini. With iGate by its side Capgemini will be better equipped to tackle the fast growing US market which is their first priority. Nearly 48 percent of the employees that will become part of the merger are based in India. This provides the opportunity for the company to compete against the Indian based IT companies and thrive in the Indian Market. Another major perk that comes through this deal is the reduction in labor cost, due to the iGate’s 18.7 percent operating margin. The deal is expected to go down in the second half of this year. After the merger iGate will become the second largely Indian based IT Company acquired by Capgemini after Kanbay International was merged in 2006.