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Capgemini makes Kanbay approach

CAPGEMINI IS BUYING fellow IT services provider Kanbay International for around US$1.25 billion in order to increase its presence in India and expand its services in the financial sector.

Capgemini had approached Kanbay nearly a year ago, but cooled off as the company was in the middle of acquiring a US consulting firm.

Kanbay — which has clients in Bahrain, the UAE and Saudi Arabia — had previously also been an acquisition target of both EDS and IBM because of its extensive offshore team. The company has some 6,500 employees and around 5,000 of them are based at three Indian development centres.

The deal will swell Capgemini’s presence in India by almost 90% and the combined company will have a headcount of 12,000 employees by the end of 2006.

The target is to take the Indian headcount to 35,000 by 2010, according to Capgemini India CEO Baru Rao.

“This will make us bigger than Accenture, EDS and IBM in India,” Rao told a press conference in India. “We will have far more employees in the IT services area than any one of them,” he claimed.

Paul Hermelin, CEO of Capgemini, said the deal would significantly enhance the company’s global banking, financial services and insurance (BFSI) practice, particularly in North America and India.

“The acquisition also gives us valuable capabilities in consumer and industrial products, telecommunications, media, life sciences and the travel and leisure verticals,” Hermelin stated. He said Kanbay fits in with the group’s expansion programme, called I3, which focuses on three levers: industrialisation, intimacy with clients and innovation.

Hermelin also said the combination would create a top-tier global IT services firm in the financial services vertical, consulting and technology expertise, and offshore resources.

Raymond Spencer, chairman and CEO of Kanbay, said that Capgemini shared the company’s vision and strategy.

“This deal represents a continuation of our existing approach. In addition, the two organisations will benefit from complementary business philosophies and cultures,”

Spencer commented. The acquisition comes as both Capgemini and Kanbay released their fiscal third quarter results. Capgemini saw revenues rise 13.5%, to US$2.39 billion, against its Q3 last year.

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