India’s biggest IT services vendor Tata Consultancy Services has bought a 75% stake in Swiss banking software and services specialist TKS-Teknosoft for CHF 100.5m ($80.5m).
The two companies have been partners for more than 20 years, with TKS holding exclusive European rights to distribute TCS’s core banking software system Quartz. However, S Mahalingam, the CFO at TCS, told Computer Business Review that TCS decided to acquire the company in order to take a more direct role with TKS’ client base.
He said: We did some offshore work for TKS, but they handled program management and provided the critical interface to the customer. We wanted to do the offshore as well as the onshore work, and move up the value chain. He cited a recent project where TKS handled the delivery and support of Switzerland’s central securities settlement and clearing system, as the sort of work that TCS in which TCS wanted more client-facing involvement.
TKS has 115 employees and made a net profit of CHF 9.6m ($7.7m) on revenue of CHF 71.5m ($57.3m) in full-year 2005. The remaining 25% stake in the company remains in the hands of a Tata Group investment division.
TCS also takes control of TKS’ two main product offerings: a private banking system Alpha, and wealth management system called e-Portfolio. Mahalingam said that TKS made around 40% of its annual revenue from product sales.
TCS has been one of the least acquisitive of the tier-one Indian services vendors, but the TKS takeover is Tata’s second move in the financial services space in a year, following its $26m acquisition of Australian banking software firm Financial Network Solutions last October. TCS also took on 950 employees from Pearl Assurance earlier this year, as part of a business process outsourcing deal with the UK insurance company.