BENGALURU: Capgeminis plan to acquire engineering consulting firm Altran for €3.6 billion ($4.1billion) could boost growth in the Indian engineering services market, analysts said.
The acquisition, announced last week, is primarily aimed at turning the technology services major into a key player with full stack capabilities across R&D, product engineering, manufacturing services, digital design, process consulting and software development and integration, according to the company.
Capgemini and Altran combined could become a €17 billion entity in terms of revenue. “A majority of engineering work is outsourced onshore in Europe to the European pure-play engineering service providers. Multinational companies never had a large presence in this sector. Now, Capgemini is going to have a sizeable engineering capacity in India and it can try to convince European enterprises to offshore more engineering work to India,” said Pareekh Jain, founder of Pareekh Consulting.
Engineering and R&D services (ER&D) outsourcing is a largely underpenetrated market and about 5% of the $1.5 trillion R&D spend comes from service providers.
Jain said Indias has a 1% share of the globally outsourced engineering services business.
European pure-play service providers such as Altran and Alten, apart from Indias top five IT services providers and pure-play firms like L&T Technology Services, are the major players in this space, he said.
The Paris-headquartered Altran bought fellow engineering services company Aricent in 2017, and unofficial estimates suggest it, along with Aricent, could have nearly 11,000 employees in India.
Capgemini-Altran together have 258,000 employees across the world, with 46% in India alone, Capgemini told analysts last week.
Capgemini is looking to combine its strengths in India and continue the growth momentum in the region, according to a company spokesperson. “In ER&D, we already have a number of people in India, and we will look at combining our strengths. In terms of the exact integration plan, this will be finalised once the deal has closed,” the spokesperson said.
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